Background

The Minister of Manpower has recently issued Regulation No.16 of 2015 regarding Procedures to Employ Foreign Workers, which has been in force since June 29, 2015 (“Regulation 16/2015), repealing and replacing the Minister of Manpower Regulation No.12 of 2013, which regulated similar matters. Regulation 16/2015 sets out a number of new provisions pertinent to procedures for employing foreign workers, aiming at controlling the use of foreign workers in Indonesia.

Key restrictions

In this Client Update, we outline several key restrictions on employing foreign workers as regulated under Regulation 16/2015, as follows:

  • Restriction on the number of companion workers: Subject to certain exceptions, employers are now obliged to appoint, at least, 10 (ten) Indonesian manpower as companion workers for each of their foreign workers.
  • Restriction on employing foreign workers domiciled overseas: Employers are now obliged to obtain an Expatriate Work Permit (IMTA) for each of their foreign workers having the position as a member of the Board of Directors or Board of Commissioners regardless whether they are domiciled in or outside Indonesia.
  • Restriction on attending a meeting in Indonesia: Foreigners must have a temporary IMTA to attend a meeting arranged by the head or representative office in Indonesia.

How does it affect you?

  • Prior to the issuance of Regulation 16/2015, the Ministry of Manpower (“MOM”) had not yet determined the number of companion workers as required by Indonesian Manpower Law. In practice, however, most employers – either investment or non-investment companies, have appointed companion workers with the ratio of 3 (three) Indonesian workers for one foreign worker, as regulated under the Indonesian Investment Coordinating Board regulation. As there is no grandfather clause in Regulation 16/2015, MOM may require employers that have already employed foreign workers to increase the number of companion workers, adjusting with the provision therein.
  • The second restriction as mentioned above is principally in line with MOM’s view before the issuance of Regulation 16/2015 that an employer of a foreign director and/or commissioner domiciled overseas must also have an IMTA. As such, since the issuance of Regulation 16/2015, an employer is obliged to secure an IMTA for each of their foreign directors and commissioners, domiciled either in Indonesia or overseas. Following the issuance of an IMTA, a foreign director or commissioner domiciled overseas may also be required to apply for a Limited Residence Permit (KITAS), as a foreign director specifically has the duty to conduct the day-to-day management of the company concerned.
  • MOM has not yet provided further explanations as to whether the meetings as intended in Regulation 16/2015 include those for, not only internal purposes, but also business purposes with third parties. As such, for the meantime, the head or representative office shall be treated or considered as an employer, and hence, be obliged to secure an IMTA if any of their affiliate foreigners working or taking office overseas needs to attend a meeting in Indonesia, for either internal purposes or business purposes with third parties.

Going forward

We still need to see any further measures taken by MOM on Regulation 16/2015, including but not limited to the socialization and/or issuance of implementing regulations specifically related to the above-mentioned restrictions.