Higher foreign/local staff ratios
Indonesian businesses are now required to have a ratio of foreign to local employees of 1:10, an increase from the previous 1:3 and 1:5 ratios. Positions such as board of directors and board of commissioners are currently exempt from these new rules. This change will have dramatic effects on organisations wishing to establish representative offices within Indonesia as they will have to deal with these stricter staff requirements.
Broader work permit criteria for short-term workers
The new regulations also affect when expatriate workers for short-term jobs are required to apply for an Indonesian work permit, also known as Izin Mempekerjakan Tenaga Kerja Asing (IMTA). As before, a Rencana Penggunaan Tenaga Kerja Asing (RPTKA) is required prior to applying for a temporary work permit. However, there are now broader rules which must be followed before an individual is allowed to work in Indonesia. Under the new amendments, an RPTKA and IMTA are also required for:
- Industrial or technological counselling and training
- The production of commercial films
- Any university, college or corporate lectures given
- Meetings with local Indonesian representatives
- Audits, quality control or any inspections
Previously, foreigners simply required a Visit Stay Permit to perform these activities within Indonesia. This is now no longer the case.
Softer language requirements for expats
Under the old regulations, foreign workers were required to be able to communicate in Bahasa Indonesia before employment was permitted. An Indonesian Language Certificate was also necessary for the application to be approved. The new rules do not regulate this requirement for now, which is excellent news for expatriates who wish to move to Indonesia but who are not fluent in the local language.
New rules for overseas-based directors
Finally, the newly announced rules make it compulsory for company directors who are not residing in Indonesia to hold an IMTA. Requirements for a temporary residency permit, otherwise known as Kartu Izin Tinggal Terbatas or KITAS, are uncertain though. As the Ministry of Law and Human Rights is the primary institute which governs these permits, it is expected to announce new regulations which fall in line with all of the Ministry of Manpower’s amendments listed above.
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Employment law changes: what you need to know
The Indonesian Ministry of Manpower has announced several key amendments to its Procedures to Employ Expatriates. These will have major impacts on companies employing foreign workers in Indonesia, individuals already employed there and anyone wishing to make the move.