Further clarifications to work permit-related rules in Indonesia

Following the announcement of stricter and broader work authorization-related rules for foreign workers in June, the Ministry of Manpower (MOM) has further clarified the changes, which were proposed in an effort to protect the local workforce.  Generally, the rules have been implemented, but contrary to previous reports, an internal review of the proposed changes is being conducted by the MOM instead of having a public comment period before implementation of some of the more significant changes.

Ratio of Foreign to Local Employees

The MOM has already started enforcing the rule that an employer must employ at least ten Indonesian nationals for every foreign employee it seeks to hire. The MOM has clarified that it will review the company's Mandatory Manpower Report (WLTK or UU No. 7) to determine how many Indonesian nationals it employs and may require the company to hire more Indonesian nationals to fulfill this requirement. 

New Short-Term Work Permit Categories

Two new categories of Foreign Manpower Utilization Plan (RPTKA) and Work Permit (IMTA) applications have been implemented - one for emergency or urgent work (up to one month) and the other for temporary work (between one and six months).  One of the benefits of the short-term work permit categories is that they will not be subject to the 10:1 ratio and companies will also be exempt from the requirement to identify a local Indonesian co-laborer for each foreign national. 

While the processing time for the short-term work permits is expected to be faster than the standard work permit, delays can be expected as the online application system has only recently been implemented. 

Based on these new changes, it is important for companies to seek advice before any business travel is arranged.

Changes in the Work Permit Process

Whereas previously the step after the RPTKA was to apply for a work permit recommendation (or TA-01), the MOM has removed the TA-01 step from the work permit application process.  Now, the RPTKA application will be the basis for the work permit (IMTA) while the IMTA will be the basis for the limited stay visa (VITAS) pre-approval.

Changes in Document Requirements for Work Permit Renewal

As part of each foreign employee’s work permit renewal process, additional documents may now be required. These include:

Proof of enrollment in Indonesia’s BPJS program (Badan Penyelenggara Jaminan Sosial ), which is akin to a social security and insurance program); and
Foreign employee’s Indonesia Tax Card (NPWP).

These additional document requirements may still be subject to change.

Additional Activities Requiring Work Authorization

As for the planned limitation of allowable business visitor activities, it remains unclear as to how the new regulations issued by the MOM will be reconciled with the Directorate General of Immigration’s (DGI) own policies and regulations. Currently, the DGI website indicates a wide variety of permissible activities for business visitors.

As for the requirement for non-resident Directors and Commissioners (as evidenced on the company's Title Deed) to obtain a work permit, the MOM has confirmed that foreign Directors and Commissioners are required to obtain an IMTA from the date they are added to the company's Title Deed.  Initial discussions with the MOM and the DGI indicate that they are supportive of Directors and Commissioners not having to apply for a limited stay permit (or KITAS), however.

What This Means for Employers and Foreign Nationals

Employers should work with their immigration professional to ensure they comply with the new procedures and rules.