Client Newsflash

New Procedures on Expatriate Utilization Permits

Less than 2 years from the previous rules on expatriate utilization (Minister of Manpower and Transmigration Regulation No. 12 of 2013), the Minister of Manpower recently enacted the new procedures of expatriate utilization under Minister of Manpower Regulation No. 16 of 2015 on Expatriate Usage Procedures (the “New Regulation”).

We describe certain new requirements in the New Regulation below.  We note that some of the new requirements may present difficulty or be more burdensome (if not impractical) for a client’s operations or management.

  1. 1:10 Ratio. There is now a ratio of 1:10 for each expatriate hired. In other words, an employer is required to recruit 10 Indonesians workers for each expatriate it hires. Previously, this ratio only applied to trade representative offices that had a 1:3 ratio.
  1. Online Submission and Processing. All applications are now submitted online.
  1. More Elaborate RPTKAs. There are several types of the plan of expatriate utilization (known in short as “RPTKA”), including RPTKA for urgent and emergency work, RPTKA for temporary work, RPTKA for special economic zones, RPTKA for maritime purposes, RPTKA for the entertainment industry, and RPTKA for karaoke workers.
  1. Mandatory NPWP. An expatriate who works for more than 6 months must now obtain a tax registration number (known in short as “NPWP”). This may be an issue for expatriates because the Income Tax Law (Law No. 7 of 1983 and its amendments) contemplate the tax on worldwide income.
  1. Mandatory Local Insurance Policy. Every expatriate in Indonesia, including directors and commissioners, must have insurance policy from an Indonesian insurance company.
  1. Mandatory JSN. An expatriate who works for more than 6 months must participate with the National Social Security coverage, i.e., BPJS Kesehatan (Health coverage) and BPJS Ketenagakerjaan (Employment coverage).
  1. Work Permit for Non-Residing Directors and Commissioners. Non-residing directors and commissioners of a company are now expressly required to have work permits.  This requirement clarifies the previously unwritten policy of the authority in this regard.This appears to also suggest that these non-residing directors and commissioners to have NPWPs and to participate in the National Security Coverage, if they are appointed for more than 6 months. 
  1. Expanded Coverage Temporary Work Permit. Temporary work permits are now required for expatriates who are in Indonesia for the following reasons:
  • To provide guidance, supervision, and training to the implementation of technology industry;
  • To participate in the production of a commercial movie;
  • To speak at a seminar;
  • To attend any meeting in a head office or a representative office in Indonesia;
  • To carry out an audit, production quality control or inspection to the branch office in Indonesia;
  • To carry out a trial work;
  • To complete a one-off work;
  • To perform work related to installation of machinery, electricity, after sales, or products in observation.

Obviously, the requirement to have a work permit for any speaking engagement and attendance of meetings will be considered impractical and difficult.

Copyright © 2015 AKSET. All rights reserved.

July 14, 2015

The foregoing material is the property of AKSET and may not be used by any other party without prior written consent. The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.

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