Following extensive lobbying and criticism from the business community, on October 23, 2015 the Ministry of Manpower enacted Regulation No. 35 of 2015 regarding Procedures for the Utilization of Foreign Workers, which amends the stringent requirements for the employment of foreigners under Regulation No. 16 of 2015, which came into force only four months earlier. The key amendments that largely revert the requirements for employing foreigners to the status quo prior to the enactment of Regulation No. 16 of 2015, with some modifications, include:
- Removing the requirement to employ a minimum of 10 local employees for every foreign employee employed. The Ministry of Manpower has confirmed that the ratio between local employees and foreign employees has reverted to the prior position of 1:1, and that this requirement applies only to foreign employees holding long-term work permits.
- Clarifying the requirements for foreign directors and commissioners of Indonesian companies residing outside of Indonesia by confirming that they are not required to obtain a work permit (IMTA), and will therefore be considered as nonresidents for Indonesian tax purposes.
- Significantly reducing the range of activities requiring a temporary work permit. A temporary work permit (which is granted for a maximum period of six months) is now no longer required for: (i) providing guidance, counselling, and training in the application of industrial and technological innovation to improve the design and quality of industrial products; (ii) giving lectures; (iii) attending meetings with the head office or representative in Indonesia; (iv) conducting audits, production quality control, or inspections of the company's branch in Indonesia; (v) undergoing work-competency tests; and (vi) performing one-off work. However, a temporary work permit is still required for: (i) producing commercial films (with a permit from the competent authority); (ii) conducting audits, production quality control, or inspections of the company's branch in Indonesia for more than one month; and (iii) performing work relating to the installation of machinery and electrical systems, providing after-sales services, and conducting product testing in the market.
It should be noted that the criteria for employing foreigners, which were expanded under Regulation No. 16 of 2015, have not been amended. Companies may only employ foreigners who: (i) have the educational qualification that is appropriate for the position to be performed; (ii) hold a competence certificate for the proposed role or have at least five years of experience for the proposed position; (iii) provide a statement that they are willing to share their expertise with their counterpart Indonesian workers; (iv) hold an Indonesian tax registration number (NPWP), if such foreigner has been working in Indonesia for more than six months; (v) have joined Indonesia's national social security scheme, if such foreigner has been working in Indonesia for more than six months; and (vi) hold an insurance policy with an insurance company that has legal status in Indonesia. However, it should be noted that the criteria referred to in sub-paragraphs (i), (ii), and (iii) do not apply to foreign directors and commissioners, or other management or supervisory roles, in Indonesian companies.
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