The Minister of Manpower (“MOM”) has amended MOM Regulation No. 16 of 2015 regarding Procedure for the Utilization of Foreign Manpower (“Reg. 16”), by issuing  MOM Regulation No. 35 of 2015 (“Reg. 35”). MOM Regulation 35 regarding Amendment to MOM Regulation 16 has been in effect as of 23 October 2015.

Reg. 35 brings, among others, the following changes in the provisions regarding the employment of foreign nationals:

The IMTA, RPTKA, and NPWP requirements for Non-Resident BOD and BOC and members of Trustee, Management and Supervisory Board, are no longer in effect.

The provision under the old Reg. 16 which requires companies and foundations to have the so-called RPTKA (Foreign Manpower Utilization Plan) and IMTA (Permit to Employ Foreign Manpower) if they have non-resident foreign directors and commissioners (in the case of companies) or foreign Trustee, Management and Supervisory Board members (in the case of foundations or yayasan), has been removed by Reg. 35.

In addition, the MOM and the Directorate General of Taxation verbally confirmed that the above mentioned non-resident officers are no longer required to obtain an NPWP (taxpayer registration number). Previously, the NPWP was required if the period of work of the respective foreign manpower exceeded 6 months, in which based on our discussion with the MOM by that time shall be evidenced by the IMTA.

Prohibition for Domestic Capital Investment Companies from appointing foreigners as Commissioner

Reg. 35 expressly stipulates that PMDNs (Perusahaan Penanaman Modal Dalam Negeri or Domestic Capital Investment Companies) are prohibited from appointing foreign nationals as commissioner.

The requirement to employ Indonesians for every foreigner employed is no longer in effect

Reg. 35 removes the requirement under Reg. 16 to employ 10 Indonesian nationals for every foreign national employed, and as confirmed from our further discussion with the MOM, no such ratio requirement shall be required.

Change in the types of activities qualified for Temporary RPTKA and IMTA

The list of work activities which are qualified for Temporary RPTKA and IMTA has been revised to the following:

  1. making commercial films, provided that the permit from the authorized agency has been obtained;
  2. performing audits, production quality control, or inspection of the company’s branches in Indonesia for a period of more than 1 month; and
  3. conducting work related to machine installation, electrical installation, after sales services, or trial products.

As a result of the above, the following activities which were in the old list under Reg.16 have been removed from the list by Reg. 35:

  1. providing guidance, counseling, and training in industrial technology application and innovation for the purpose of improving product quality and design and enhancing overseas marketing cooperation;
  2. giving lectures;
  3. attending meetings held by the head office or representative office in Indonesia;
  4. testing the work capability of foreign workers; and
  5. performing work which can be completed within one time frame.

Foreign Manpower Employment Compensation Fund or Dana Kompensasi Penggunaan Tenaga Kerja (“DKP-TKA”) Payment

One of the notable provisions under Reg. 35 with regard to DKP-TKA payment is the removal of the obligation to make such payments in Rupiah, as previously required by Reg. 16. Other than that, Reg. 35 stipulates that any DKP-TKA payment which has been made for:

  • non-resident foreign directors and commissioners or foreign Trustee, Management and Supervisory Board members; and
  • temporary IMTA for the activities that have been removed by Reg. 35,

will not be refunded.

As a general remark, it is of note that the MOM has implemented a via-Skype interview mechanism with the management of a sponsoring company in order to help the MOM in verifying the RPTKA application which has been submitted.