Immigration Compliance Lookouts for Indonesia

April 21, 2015

Country / Territory

By: Kenneth Lau

When sending expatriates to work in Indonesia, it is important that companies take a very compliance-minded approach to the immigration system. The process of obtaining a work permit in Indonesia, for example, will be coursed through multiple government agencies, including the Ministry of Manpower & Transmigration (MOMT) and the Directorate General of Immigration (DGI). It is crucial that companies comply with the rules of all government touch-points along the way. The below highlights several common areas of concern, pertaining to immigration and work permit compliance.
 
Business travelers
 
As they do in many countries in the region, business visits can occupy a gray area under Indonesian immigration law. Generally, under the Indonesian immigration regulations, visitor visas are granted to foreign nationals traveling to Indonesia for government duties, educational visits, social visits, cultural visits, tourism, business visits, family visits, journalistic activities, or transit to other countries. In practice, business travelers should take care that their activities (and the frequency and duration of such visits) do not give the appearance that they are working in the country.
 
While there are different modes of entry for business visitors (including Visa-Free entry, the Visa-on-Arrival and the Consulate-issued Visit Visa), such visitors should take care to understand the requirements for each as well as the conditions. For example, while there is a seven-day visa-on-arrival for certain special economic zones, these should really only be used for tourism purposes or to participate in conferences, seminars or events sponsored by international organizations or by the Indonesian government.
 
The specific activities that can be performed will depend on the status under which the traveler enters. Generally speaking, the following business activities should be permissible:
 
  • Attending business meetings, business negotiations, and the like;
  • Holding business discussions, such as for the sale and purchase of goods and services;
  • Participating in seminars or international exhibitions;
  • Attending a conference held by the company’s head office or representative office in Indonesia; or
  • Exploring opportunities in business development, investment, or sales.
 
If a business trip (even a brief one) will involve activities other than those outlined above, a work permit would likely be required.
 
Job titles for expatriates
 
The work permit process for expatriates can be confusing and difficult to navigate for employers. One aspect that has made it more complicated is choosing the appropriate job title for the expatriate to hold in Indonesia. As a rule, the proposed job title should match up with the expatriate’s job description and industry.
 
The MOMT has a listing of job titles by industry that can be held by expatriates. Some industries, such as Trading, Service, or Consulting, are more heavily restricted than others. If a proposed job title is not on the listing, then this may pose a risk of rejection by the MOMT for that particular job title.
 
Additionally, under a new MOMT announcement, the maximum validity period for work permit applications submitted by companies in the Service, Trading, and Consulting industries would be six months for Advisor positions, with no renewals allowed. The rationale here is that, for such positions, a local Indonesian worker can be trained to take over the position within that period of time (so that it is unnecessary for an expatriate to hold that position in the long term).
 
Under this backdrop, companies are encouraged to work closely with their immigration provider to ascertain the likelihood of rejection of an application for a particular job title as well as any other lookouts.
 
Sponsoring entities
 
Often, companies will be looking to send their employees to work in Indonesia without having their own corporate setup in place. This poses additional challenges to the work permit process as there must be a legal entity in place that is eligible to sponsor.
 
Under such a scenario, it is important that the company identify an appropriate work permit sponsor in Indonesia. There must be a bona fide connection between the work permit sponsor in Indonesia and the sending company in such a case. For instance, it would not be appropriate for a third party to sponsor the application if that third party has no corporate ties to the sending company (i.e., subsidiary) or any other agreement (such as a service agreement or contract) with the sending company. The activities carried out by the expatriate in Indonesia should generally be in line with the objectives and purposes of their Indonesian sponsoring entity.
 
With that in mind, it may be possible, for instance, for a customer in Indonesia to sponsor the expatriate (if their entity meets the eligibility criteria) as there should be an agreement in place between the sending company and the customer in Indonesia. The customer should be aware, however, of its obligations as the sponsor.
 
The bottom line for companies wishing to send their employees on assignment into Indonesia is that they must ensure that an appropriate sponsoring entity is in place.
 
Co-laborer requirement
 
One of the most important requirements of the initial application of the work permit process (the RPTKA – Rencana Penggunaan Tenaga Kerja Asing – or Foreign Manpower Utilization Plan) is that the Indonesian sponsoring company must provide details of the appointment of local Indonesian workers as counterparts (co-laborers) of the expatriates. The rationale of this rule is that the expatriate should be training their co-laborer to eventually take over the role when they end their assignment.
 
The MOMT is strictly enforcing a 1:1 ratio (at least) for the co-laborer requirement. In practice, the co-laborer should hold a role similar to that of the expatriate (or at least overlap in nature). The co-laborer should be in the same business function as the expatriate and either equal or one position below the expatriate in the company’s hierarchy. The MOMT officer has discretion to determine what qualifications of the co-laborer are sufficient for the position.
 
The co-laborer rule is designed to ensure that Indonesian companies are staffing up with local Indonesians (in fact, the MOMT will often look beyond just the 1:1 ratio for co-laborers and review the total headcount of the company as a factor as well when making their decisions). It is therefore important for companies wishing to sponsor expatriates to ensure that they also have sufficient numbers of local employees.
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