Angloinfo Text_Obtaining a Work Permit as a Foreigner in Indonesia

OBTAINING A WORK PERMIT AS A FOREIGNER IN INDONESIA

Preliminary Comments

Anyone presented with the idea or opportunity to work in Indonesia should take heed of the following:

“Please be informed that it is not easy for foreigners to work and stay in Indonesia since Indonesia has very strict and complicated immigration/visa requirements and regulations, and the process can be very long. Applicants should be aware of this before making any further plans.”

This quote is excerpted straight from an Indonesian Embassy web page as written by Indonesian government officials.  To be forewarned is to be forearmed!

On the other hand, if you are a foreign national who is a prospective employee of an Indonesian company or institution, you’ll be glad to know that the bulk of the work permit and VISA responsibilities falls upon the business group who is hiring you. 

Please note: this brief focuses on the foreign worker and his or her family. 

General Considerations

Who is eligible to work in Indonesia?

The Indonesian foreign and domestic investment laws allow the employment of expatriate personnel in positions that cannot be filled by Indonesian Nationals. Work permits are issued by DEPNAKER WILAYAH (Departemen Tenaga Kerja Wilayah- Regional Department of Manpower).  They provide a current list of all professional positions in Indonesia which are open to foreign nationals.  As unemployment is an ongoing problem in Indonesia, part of this department’s mandate is to safeguard employment positions for the Indonesian people.  As long as Indonesians are not available or qualified, a foreigner may be hired to fill a given position.  This includes technicians, directors, managers, field experts, and teachers.

Indonesian companies who hire foreign nationals are expected by the Indonesian government to provide professional training for their own Indonesian employees in the area of expertise the foreign worker provides.  This is one reason why work permits are granted on a year-to-year basis.  The government would rather see an Indonesian filling the position, and will monitor job training efforts for those companies hiring foreign nationals.

Due to Indonesia’s perennial high unemployment rates, restrictions of foreign employment have been quite strict in the past, but have relaxed some in recent time.  This is especially true as relates to direct investment enterprises.  Indonesia’s trade policy has pursued foreign investment vigorously, and this has resulted in laxer work permit regulations as applied in practice.  As explained below, FDI type companies fall into this category.  FDI (Foreign Direct Investment) involves participation in management, joint-venture, transfer of technology and expertise.  This style of business partnership is presently an important part of Indonesia’s drive to modernize. 

In principle, the reasoning here leads to the following conclusion:  foreign employment in Indonesia can only be considered temporary in nature.  There are big exceptions, though, the most prominent one being in the field of teaching English as a Second Language.

No matter the terms of employment or contract drawn up between an Indonesian-based company and a prospective foreign employee, the company providing employment must apply for and obtain a work permit for their new employee.  All terms of contract will be reviewed by Indonesian authorities when they review the request for a work permit.

Applying for a work permit in Indonesia is inextricably tied into applying for a temporary stay VISA.  The two go hand in hand and are processed together. This brief will treat the two as integral components.

As detailed in the AngloINFO Residency brief on Indonesia, the basic temporary stay VISA is called a KITAS (kartu izin tinggal terbatas- Limited Stay VISA).  For those having secured employment in Indonesia, a closely related and temporary VISA is required before the KITAS.  It is called VITAS (VISA izin tinggal terbatas).  After the work permit is approved, the VITAS can be transformed into a KITAS.

In brief, here is the procedure for obtaining a work permit, followed by a VITAS, temporary stay VISA:

Work Permit & Associated Limited Stay VISA

Preliminary Information & Documents Needed

Indonesian law stipulates that the “ability to sufficiently communicate” in the Bahasa Indonesian language is a basic requirement of a foreigner applying for a work permit.  This is rarely enforced, though, as it is highly impractical.  The prospective foreign worker might well raise this point during contract negotiations with their Indonesian employer, though, just to be on the safe side.

Another consideration is: what happens if upon moving to Indonesia the job falls apart?  One possible safeguard is for the foreigner to insist on a “hold harmless” clause in the job contract.  This would hold the company liable to reimburse costs involved if such a thing occurred. 

Before the procedures are explained, here is a list of documents that the foreign worker must provide their company before the process can begin:

THE FOREIGN EMPLOYEE PROVIDES

• Copy of valid passport with at least 18 months left before expiration
• CV (Curriculum Vitae) in either English or Indonesian.  This must be signed by worker.
• A separate list job references and work experience.
• Copy of educational diplomas and degrees (most recent is sufficient)
• Photographs- all with red background.

 16 color:  4 x 6 cm
   4 color:  3 x 4 cm
   5 color:  2 x 3 cm

FOREIGN EMPLOYEE’S FAMILY PROVIDES

• Passport (same as above)
• For husband or wife, record of wedding certificate
• For children, record of birth certificate(s)
• Photos of each family member (all with red background):

10 color, 4 x 6 cm
3 color, 3 x 4 cm
3 color, 2 x 3 cm

As mentioned, the employer bears the brunt of the work.  They must provide the following:

NOTE: all acronyms for forms and agencies are translated and explained in the procedure section immediately following

THE EMPLOYING COMPANY PROVIDES:

For a Foreign Worker’s Permit- First Time Application:

•  Letter of Application from the company
•  Form PPt2  (Request for Permission to Apply for Work Permit)
•  Copy of Manpower Utilization Plan for a Foreign Worker(RPTKA)
•  Copy of KITAS (when available at end of process)
•  Copy of Letter of Recommendation (TA-01)
•  Copy of complete passport
•  Copy of employee’s Curriculum Vitae
•  Copy of employee’s work history and references
•  Copy of Educational Diploma/Certificate (last of most current is sufficient)
•  Copy of Work Contract
•  Copy of Valid Report Obligation of Worker
• Photographs size 4 X 6 cm. 4 sheets (black and white) 
  

Requirements for Work Permit Extension/Renewal:

• Extension Form of Work Permit for Foreigners. 
• Copy of Manpower Utilization Plan for a Foreign Worker (RTPKA)
• Copy of KITAS
• Recommendation from Manpower Department
• Book of Legitimization of Prior Permit
• Book of proof of Foreign worker’s tax payment for the past fiscal year
• Employee’s POA Blue Book verifying Foreign Worker’s Arrival at Manpower Dept.
• Copy of the present Work Contract
• Report of Realization of Education and Training Implementation
• Copy of IWPL Payment for Position that is obliged to pay IWPI.
• Photograph size 4 X 6 cm. 2 sheets (black and white)

 

Requirements when reporting a change of employee’s position

•  Letter of Application from the company 
•  Letter of Approval of change of position from BKPM 
• Book of Legitimization of prior Permit 
• Copy of Work Experiences 
• Photograph size 4 X 6 cm. Sheet (black and white) 
  

WORK PERMIT APPLICATION PROCEDURE

Expect the entire process to take up to 30 days processing time. Foreign workers need not worry about VISA status in the interim.  As long as the prospective employee reports to immigration in the first three days after arrival in Indonesia, the VITAS issued while the worker was still living in the country of origin will cover the processing period.  This is also true of the worker’s family.

A company wishing to employ an expatriate must obtain the approval of the government before proceeding to apply for a work permit on behalf of a foreign worker.  Formal approval request will come in the form of a SPT (Surat Pemberitahuan- Letter of Announcement or Notice) or SPPP (Surat Perjanjian Pelaksanaan Pekerjaan- Implementation of Employment Contract Agreement Letter), and will be directed to the Department of Manpower.

RPTKA , TA-01, & IKTA

For companies:
PDMA Rencana Penanaman Modal Dalam Negeri (New Domestic Investment)
PMA  Penanaman Modal Asing (FDI- Foreign Direct Investment)    
     see:      http://en.wikipedia.org/wiki/Foreign_direct_investment

• Companies eligible to apply for a work permit often carry the status of PDMA (New Domestic Investment), or PMA (Foreign Direct Investment).  Such companies seeking a work permit for a foreign employee must first submit a RPTKA (Rencana Penempatan Tenaga Kerja Asing, or Manpower Utilization Plan for a Foreign Worker).  Work permits for senior positions held by foreigners are good for three years and are renewable.  All other positions are valid for one year and can be renewed as well, though there will be limits to the number of renewals. (see below)

• In conjunction with the RPTKA, a SP PMA (Surat Persetujuan PMA- Notification Letter of Foreign Direct Investment), or SP PMDN (Surat Persetujuan PDMN- Notification Letter of New Domestic Investment) is also submitted.

• When the RPTKA is approved by the Departement of Manpower,  they will issue a letter of recommendation.  This Rekomendasi VISA Kerja (Recommendation for Work Permit) is better known as a “TA-01.”  The TA-01 is released by the BKPM (Investment Coordinating Board) on behalf of the Minister of Manpower.

• A closely associated group (BKPMD- Regional Investment Coordinating Board) receives the letter and makes the official approval for issuance of the work permit, know as the IKTA (Izin Mempekerjakan Tenaga Kerja Asing, or Permit to Employee a Foreign Worker).

Limited Stay VISA (KITAS or VITAS)

• At the same point of time the RPTKA is approved, the company applying is required to submit a VITAS (VISA Tinggal Terbatas- Limited Stay VISA) application to the BKPM/Departement of Manpower.  The appropriate form to be be filled out is a request permission form called the “PPt.2.”
• BKPM then issues a letter of recommendation (based on the TA-01) to the Director General of Immigration.
• The Directorate General of Immigration then sends a telex to the appropriate Indonesian embassy or consulate overseers to issue a VITAS ( transitional Limited Stay VISA)
• The VITAS can be picked up by the prospective foreign employee at the overseas Indonesian Embassy so contacted.  The VITAS comes in the form of a passport stamp. This can be used to legally enter Indonesia.  NOTE: The employee’s family are so authorized, too, and can have their passports stamped at the same time.
• Once inside Indonesia, they must report to the regional immigration office within a three day period.  The process will begin for transforming the VITAS into a KITAS (kartu izin tinggal terbatas- Limited Stay VISA). Finger prints will be taken, a POA (Pengawasan Orang Asing- Blue Alien Registration Book) is applied for.

The foreign worker is validated for a period of one year from the date of entry into Indonesia.  If the company wishes to retain the services of the foreign employee, the work permit can be extended for one year three consecutive times.  The complication here is that the worker must leave Indonesia after obtaining an EPO (exit permit only) at the immigration office, and then reenter.  After reentering they must reapply for a new KITAS. 

FEE:  The IKTA (work permit) will be issued by BKPM only after the company has paid USD 1,200 to any BNI (Bank Nasional Indonesia). 

As with any KITAS, the bearer must report to their local Kelurahan (village or neighborhood chief), and POLRES (Regional Resort Police Station) and process the following:

• SKLD Surat Keterangan Lapor Diri ( Certificate of Police Headquarters Registration )

Issued by Foreigners Supervision Unit of District Police

• SKPPS  Surat Keterangan Pendaftaran Penduduk Sementara ( Certificate of Registration Temporary Resident )

Issued by Provincial office for Resident Affairs.

• SKTT  Surat Keterangan Tempat Tinggal ( Certificate of Domicile )

Issued by Residential Chief of the village.

• SKDLN  Surat Keterengan Datang dari Luar Negeri (Certificate of Registration After Arrival from Abroad)

Issued by Residential Chief of the village.

• STM   Surat Tanda Melapor ( Report Certificate )

Issued by the Regional Resort Police Station.

• Lapor Keberadaan (report of expatriate presence)

Issued by Regional Department of Manpower (DEPNAKER WILAYAH).

NOTE:  More details about KITAS and all of these extra registration certificates (except the last) are found in the Residency brief in the Indonesia section of AngloINFO.

Self-Employment
Many foreign nationals own their own businesses in Indonesia.  It is perfectly legal. This is especially common in the tourist industry.  For example many hotels, live aboard dive boats, and other tourist concessions are owned and operated by foreigners.  Sometimes Indonesian business partners are involved, sometimes not. It so happens that many foreign business owners are married to Indonesians, or have Indonesian partners/operational managers.   These are not requirements, though.
Creating a business is a complex and individual process. The proper procedure goes beyond initial paperwork and is dependent on what kind of business is involved, who the owners are, and what the specifics of the contractual arrangement.  If acquiring land is a necessary component for example, foreigners aren’t allowed to own land so they most likely will have to negotiate a long-term lease.
According to the law, the minimum capital for creating a foreign investment company (known in Indonesia as a PT PMA*) is USD 100,000.  This amount of money is required in part to prove the proposition is serious. An application must be submitted to BKPM (Investment Coordinating Board), which as mentioned earlier, is an agency under the greater Department of Manpower (DEPNAKER WILAYAH- Departemen Tenaga Kerja Wilayah).
The following Indonesian website provides an outline for starting a PT PMA company.  Remember that this is but one service, and but one expressed set of procedures.  Expect variations as this is Indonesia!  The information should be checked against BKPM’s advice.
http://rcs.co.id/services/name/pma-foreign-direct-investment-penanaman-modal-asing

Consult your local Indonesian embassy or consulate for details.  If in Indonesia, consult with the Department of Manpower.  The best source of information is no doubt foreign business owners themselves.  What you will quickly find is that no two stories of business creation will be the same!
*PT stands for Perseroan Terbatas, or Limited Company.  PMA is the acronym for Penanaman Modal Asing, or Foreign Direct Investment. 
TAX PAYER’S IDENTIFICATION CARD
Foreign workers employed in Indonesia need to pay income tax and hence register with the Indonesian Tax Office (Kantor Direktorat Jenderal Pajak).  The office will issue a NWTP (Nomor Pokok Wajib Pajak- Taxation Identification Number) which comes in the form of a laminated card.  The employer should help the employee with this, but the employee should specifically inquire
Foreign workers will be required to file for and pay income tax.  The yearly wage determines the tax rate.  Employers often deduct tax from wages, but employees should monitor this and make sure the deductions are correct and are actually being paid the tax office when due and in the employee’s name.  Problems arise because the employee is required to file on their own, so double or errant payments can and do occur.  To avoid such problems, meet with the employer concerning this matter and also contact your local Indonesian Tax Office for more details.  Contact details are provided below.

Contact information and other helpful web sites
Indonesia Embassies and Consulates, worldwide      http://id.embassyinformation.com/
List of Indonesian Government Web Sites        http://indonesia.elga.net.id/govweb.html

Indonesian Department of Immigration        http://www.imigrasi.go.id

List of all Indonesian Immigration offices: http://www.imigrasi.go.id/index.php?option=com_contact&catid=44&Itemid=67

_______________________________________________________________________________________
Department of Manpower and Transmigration
DEPNAKER WILAYAH- Departemen Tenaga Kerja Wilayah
Jl. Jend. Gatot Subroto Kav. 51
Jakarta 12950 Indonesia
T : (6221) 522 9285
F : (6221) 7974488
W : www.nakertrans.go.id
E :  redaksi_balitfo@nakertrans.go.id

Dinas Tenaga Kerja Transmigrasi dan Kependudukan Provinsi Bali
Department of Manpower, Bali
Jl. Raya Niti Mandala Renon
Denpasar
Bali
Indonesia
T:  (0361) 225962 / 22559
W: disnaker@bursakerjabali.com
E:  disnaker_bali@yahoo.com
_____________________________________________________________________
Indonesian Tax Offices

Direktorat Jenderal Pajak             http://www.pajak.go.id/

Table of Indonesian Tax Offices- contact information (for download)

http://www.pajak.go.id/dmdocuments/Tabel%20Wilayah%20Indonesia.pdf

National Headquarters Tax Office, Jakarta

Kantor Pusat Directorat Jenderal Pajak
Direktorat Penyuluhan, Pelayanan, dan Hubungan Masyarakat
Kantor Pusat Direktorat Jenderal Pajak
Jl. Jenderal Gatot Subroto No. 40-42

pusat.pengaduan.pajak@gmail.com

Tax consultation call center:          (021)500200 
SMS Center:                                  0813 178 PAJAK (0813 178 72525)
Telephone:                                    (021) 5250208, 5251609, 5262880 
http://www.pajak.go.id/index.php?option=com_content&view=article&id=89&Itemid=113