Proposed Revisions

Yesterday we became aware that the Ministry of Employment is considering revising Regulation 16 to (among other things):

  1. Non-resident Director and Commissioner Work Permits

Remove the requirement for non-resident directors and commissioners to obtain work permits.

  1. Temporary Work Permits

Reduce the activities that require a temporary work permit from the 8 activities listed in Regulation 16 to the following 3 activities only:

  1. making a commercial movie that has received authorization from the relevant agency
  2. work that is completed in one go
  3. work related to machinery installation, electrical, after-sales service, or products that are in business exploration stage

If the changes are made, this would mean that a temporary work permit would no longer be required for the activity of "attending a meeting held with the headquarters or the representatives in Indonesia". As mentioned in our most recent client alert on Regulation 16 (see attached), this is understood to mean that a foreigner who comes to Indonesia to meet with representatives of their local office needs a temporary work permit.

  1. Ratio

To only impose the 10:1 ratio for:

  1. certain labor intensive industries (min 200 workers and min labor cost of 15% of production costs)
  2. construction services
  3. automotive industry

Timing

We understand that:

  • the revisions to Regulation 16 "may" be issued in December 2015; and
  • a draft of the proposed revisions has been released to some of the international chambers of commerce for comment.

Sanctions

Ministry of Employment officials have (again) verbally indicated that at the moment they will not impose sanctions for non-compliance with Regulation 16.

Clients should be mindful of the fact that regular visits to Indonesia (or visits for an extended period) can be regarded by authorities as an indication that someone is "working" in Indonesia. If a foreigner works in Indonesia, they need a work permit and other related documents.