Indonesia: Most new work permit policies reversed

The Ministry of Manpower (MOM) has issued an amended regulation that reverses most of the controversial new requirements issued in July (which had been implemented progressively since then). Among other changes, the local to foreign worker ratio and the rule for non-resident directors and commissioners to obtain a work permit have been removed.

Relaxation of Ratio of Local to Foreign Employees

The amended regulation removes the requirement for companies to hire ten Indonesian workers for every foreign worker they employ. The MOM has not yet released information regarding any new ratio that will be used to adjudicate Foreign Manpower Utilization Plan (RPTKA) applications.

Activities No Longer Requiring Work Permits

Another reversal of policy includes the removal of the requirement for foreign nationals conducting the following activities to obtain a Temporary RPTKA and IMTA (Work Permit):

  • Mentoring, counseling, and training activities;
  • Lecturing/presenting;
  • Attendance at meetings organized by the head office or representative office in Indonesia; and
  • Undergoing a competency assessment in Indonesia.

Although these activities can technically be conducted under business visas, authorities may still be conducting unannounced audits and inspections.  Frequent visits and extended stays may be considered work in certain cases, depending on the totality of the circumstances.

Additionally, foreign Directors and Commissioners residing abroad are no longer required to hold a work permit. Foreign Directors and Commissioners residing in Indonesia will still need to obtain a work permit.

Short-Term Work Permit Categories Remain

Notwithstanding the above, a Temporary RPTKA and IMTA are still required for the following activities:

  • Commercial film-making;
  • Audits, production quality control, or inspections at branch offices of the company in Indonesia for more than one month; and
  • Work related to machinery installation, electricity installation, after-sales services, or product services within the period of business development.

Work Permit Documentary Requirement Changes

Because the new regulation is silent as to the social security and tax card requirements, it is assumed that workers holding the standard work permit must still provide proof of enrollment in Indonesia's social security and insurance program (Badan Penyelenggara Jaminan Sosial) and must obtain an Indonesia Tax Card (NPWP), at least until further notice. These will be required at the time of extension.

What This Means for Foreign Nationals

Business visitors should continue to limit their activities according to the regulation and should be mindful that activities such as manning a workstation or conducting business in an internal office rather than a conference or meeting room may be considered work.

Although processing times for Temporary RPTKA and IMTA applications have not yet improved over the standard RPTKA and IMTA applications, if they do, the new short-term work permit categories should serve as better options for employers sending employees to Indonesia on short notice.

Employers are encouraged to work closely with their immigration professional to determine the most appropriate type of visa. MOM officials are expected to provide practical feedback on the amended regulation in the near future.