The investors can buy and own land in Indonesia for a certain period of time by using the following rights:
HGU, HGB, and Right of Use can be owned by Indonesian citizens, a foreigner residing in Indonesia, corporate bodies established under Indonesian Law and are based/ having an office in Indonesia, and foreign companies that have a representative office in Indonesia.
The HGU and HGB ownership are allowed to change during the contract period. However, the land usage right can be transferred to other parties with the approval of the relevant government official. The individual land usage right can also change hands.
Yes, it depends on the type of property:
This right can be held by Indonesian individuals or entities as well as the government approved FDI companies and can be pawned.
FDI companies that are property developers can buy land in Indonesia to develop a property. The status of the land is HGB which will be divided into small lots accordingly. Then, the property buyer can submit an application to change the status of the land to Ownership Rights (Hak Milik) which is only allowed for Indonesian citizens.
The basic tax obligation is Income Tax (Pajak Penghasilan or PPh) which is progressive and applied to both individual(s) and enterprises. FDI companies that are located and conduct business activities in Indonesia and foreigners who work and earn income in Indonesia generally must bear the same tax obligations as the resident taxpayers. The self-assessment method is used to calculate income tax.
The Tax Withholding system is used in Indonesia to collect the income tax. If a certain item of income is subject to withholding tax, the payer is responsible for holding or collecting taxes. For example, employers are required to withhold income tax of the salaries paid to their employees and pay the tax to the tax office on their behalf.
Note:
Detailed information on Income Tax should refer to The Income Tax Law No. 36 of 2008.
Land & Building Tax (Pajak Bumi dan Bangunan or PBB)
The owners of land & buildings have to pay tax annually on land, buildings and permanent structures. The effective rates are nominal, typically not more than one-tenth of one percent per year (0.1%) of the asset value.
Value Added Tax or VAT
In normal cases, a 10% VAT is applied to imports, manufactured goods, and most services. However, in accordance with the Government Regulation No. 7 of 2007, Free Charge of VAT to the importation of certain VAT charged goods having the strategic term which consist of:
Sales Tax on Luxury Goods (Pajak Penjualan atas Barang Mewah or PPnBM)
This tax ranges from 10% to 75%. The list of the tax should be referred to The Government Regulation No. 12 of 2001 jo. No. 43 of 2002 jo. No. 46 of 2003 and other related tax implementation regulations.
Stamp Duty
The stamp duties nominal are either IDR 3,000 or IDR 6,000 on certain documents. The rate of IDR 6,000 is applicable for letters of agreement and other letters, such as Notary Deed and Land Deed including its copies. For all documents bearing a sum of money, the rate is IDR 6,000 when the value stated in the document is more than IDR 1 million, and IDR 3,000 when the value is between IDR 500,000 and IDR 1 million. Below IDR 500,000 is not subject to stamp duty. For cheques, the rate is IDR 3,000 regardless of money value stated.
Deemed Withholding Tax
Applicable for Trade Representative Office in Indonesia. Decree of Directorate General of Taxation, KEP-667/PJ./2001, states that deemed withholding tax for Trade Representative Office must be paid at the rate of 0.44% out of 1% gross export value.
This is only applicable to foreign taxpayers who have no double-tax treaty agreement. For more information on the payment details, please refer to Directorate General of Taxation Circular No. SE-2/PJ.03/2008.
Beside tax, local government in the provinces or cities usually apply retribution for some business sectors and it varies from region to region.
Yes, foreigners who will travel to Indonesia should apply for a visa from the Indonesian Embassy in their respective countries unless they come from one of the visa-exempt countries or the countries that qualify for Visa on Arrival or VoA (Visa Kunjungan Saat Kedatangan).
All visitors must hold a passport valid for 6 months from the date of arrival and have valid return ticket. The immigration entrance officer at the airport/seaport may ask the passenger to show any necessary documents (such as hotel reservation and other financial evidence).
Regarding the purpose of the visit, ASEAN Countries Nationality Visitors are able to visit Indonesia without any visa for the purpose of official duties, education, tourism, business, government, and social culture purpose. They may stay up to 30 days without renewal or convert to other types of visas.
Presidential Regulation Number 21 of 2016 regarding Visa-Free Visit. This latest regulation replaces its previous preceding the Presidential Regulation Number 104 of 2015 on Amendment of Presidential Decree Number 69 of 2015.
As per this regulation, 169 recipient countries that are free of visit visas are given a stay permit for 30 days and cannot be extended.
The countries are:
Albania; Algeria; Andorra; Angola; Antigua and Barbuda; Argentina; Armenia; Australia; Austria; Azerbaijan; Bahamas; Bahrain; Bangladesh; Barbados; Belarus; Belgium; Belize; Benin; Bhutan; Bolivia; Bosnia and Herzegovina; Botswana; Brazil; Brunei; Bulgaria; Burkina Faso; Burundi; Cambodia; Canada; Cape Verde; Chad; Chile; China; Comoros; Costa Rica; Cote d’Ivoire; Croatia; Cuba; Cyprus; Czech Republic; Denmark; Djibouti; Dominican Republic; Ecuador; Egypt; El Salvador; Estonia; Fiji; Finland; France; Gabon; Gambia; Georgia; Germany; Ghana; Greece; Grenada; Guatemala; Guyana; Haiti; Holy See; Honduras; Hong Kong; Hungary; Iceland; India; Ireland; Italy; Jamaica; Japan; Jordan; Kazakhstan; Kenya; Kiribati; Kuwait; Kyrgyzstan; Laos; Latvia; Lebanon; Lesotho; Liechtenstein; Lithuania; Luxembourg; Macau; Macedonia; Madagascar; Malawi; Malaysia; Maldives; Mali; Malta; Marshall Islands; Mauritania; Mauritius; Mexico; Moldova; Monaco; Mongolia; Morocco; Mozambique; Myanmar; Namibia; Nauru; Nepal; Netherlands; New Zealand; Nicaragua; Norway; Oman; Palau; Palestine; Panama; Papua New Guinea; Paraguay; Peru; Philippines; Poland; Portugal; Qatar; Romania; Russia; Rwanda; Saint Kitts and Nevis; Saint Lucia; Saint Vincent and the Grenadines; Samoa; San Marino; Sao Tome and Principe; Saudi Arabia; Senegal; Serbia; Seychelles; Singapore; Slovakia; Slovenia; Solomon Islands; South Africa; South Korea; Spain; Sri Lanka; Suriname; Swaziland; Sweden; Switzerland; Taiwan; Tajikistan; Tanzania; Thailand; Timor-Leste; Togo; Tonga; Trinidad and Tobago; Tunisia; Turkey; Turkmenistan; Tuvalu; Uganda; Ukraine; United Arab Emirates; United Kingdom; United States of America; Uruguay; Uzbekistan; Vanuatu; Venezuela; Vietnam; Yemen; Zambia; Zimbabwe.
Passport holders from 15 countries and territories can visit Indonesia for the purpose of tourism, business, education, government-related tasks, socio-culture, journalism, or transit. These 15 countries can enter and exit Indonesia through any airport or harbor. Meanwhile, nationals from 75 countries and territories can visit Indonesia for the purpose of tourism only and can only enter and exit Indonesia through certain airports and harbors These 75 countries can obtain Visa-Free Visit at certain airports and harbors.
Airports:
Harbors:
Nationals from the following 4 countries may apply for a VoA for 30 days length of stay by paying a certain amount of money. The rate is the same for any passenger of any age, including infants. The Indonesia VoA can be extended once for 30 days:
Nationals who are not eligible for Visa Free Visits or VoA should apply for a visa at the Indonesian embassy or consulate.
Nationals from 10 following countries require approval from Immigration Office in Indonesia before travelling for business, tourist and social visits purposes:
All the applicants for any types of visa must comply with the general requirements below:
Note:
In regards to visa application fees, the currency fluctuation visa fees are adjusted accordingly to each country’s currency. For this reason, each visa applicant is advised to contact directly to the Indonesian Embassy or Consulate General located in the respective country. In the case where the Indonesian Government representative is not available at the applicant resident city or area, please contact the Ministry of Foreign Affairs of the Republic of Indonesia at the following website, www.kemlu.go.id.
The applicant can apply online by visiting website www.imigrasi.go.id and click Visa Section or come directly to Directorate of Immigration. Foreigners intending to work and stay in Indonesia must get Limited Stay Visa (VITAS).
To get VITAS, applicants must have a sponsor both from their home country and in Indonesia.
The application should be submitted by the sponsor in Indonesia to the Directorate General of Immigration in Jakarta.
Once the application is approved, Directorate General of Immigration in Jakarta will give the approval letter to the sponsor or counterpart in Indonesia and to the Indonesian Embassy where the visa will be collected.
The embassy will issue the VITAS only after receiving approval from the Directorate General of Immigration in Jakarta. Once the foreigners enter Indonesia by using VITAS, they should apply for a Limited Stay Permit Card (KITAS) from the local immigration office.
Note:
Application of working permit will be explained further in the Chapter of ‘Labors Law’.
Yes, you can bring your family to Indonesia. They should get a Limited Stay Visa (VITAS) and Limited Stay Permit Card (KITAS) by following the same procedures mentioned above.
Yes, there is a visa facilitation scheme applicable for the investor in the Special Economic Zone or SEZ (Kawasan Ekonomi Khusus or KEK). Currently, Head of One Stop Service (Kepala Pelayanan Terpadu Satu Pintu or PTSP), which has been designated by the Director General of Immigration to implement the licensing authority in the provision of facilities for licenses and investment to investors who are in a SEZ which cover certain areas in Batam, Bintan and Karimun in Riau Islands Province.
Immigration officials can grant approval of Limited Stay Visa (VITAS) to foreigners who live in the SEZ for people coming as:
Officials at the Overseas Indonesian Representative can grant a Limited Stay Visa (VITAS) for 2 years for investors after receiving approval from the immigration officer at PTSP in SEZ.
In the framework of assessment or business development in the SEZ, Authorized Overseas Indonesian Representatives are allowed to provide a Multiple-Trip Visa which is applicable for 1 year for foreigners with a period of stay of 60 days.
In regards to the provision of short-term work for the development of SEZs, foreigners with access to Visa-Free Temporary Visit (Bebas Visa Kunjungan Singkat or BVKS) can be given VoA for a period of 7 days.
Limited Stay Visa (VITAS) Requirements (for SEZ area):
Multiple Visit Visa Requirements (for SEZ area):
There are 2 ways to export product to Indonesia:
1. Appointing local company in Indonesia as your agent or distributor. A local distributor company will fulfill all the requirements to import your products. If the products are related to food and drugs, it should be registered to the National Agency of Drug and Food Control (BPOM) (www.pom.go.id). However, the ownership right of product registration can only be obtained by the local distribution company. Therefore, there might be a risk such as the ownership right of product registration may cause conflicting issues on the possession of the rightful owner of the market trademark.
2. Establishing your own company as the Trading (import/export/distributor) Company. Through this scheme, your company can apply the ownership right of your own products. If your trading company is just importing, your company is not allowed to distribute the products hence you still have to appoint a local distributor or agent company.
In both ways, the company should obtain Single Business Number (NIB) via the OSS website, www.oss.go.id.
There are restrictions and limitations to export and import some specified products and commodities. Please refer to the website of Indonesia National Single Window or INSW as follows, http://eservice.insw.go.id.
Visit the INSW website as mentioned in the previous question.
In a general and simplified explanation, the steps of customs clearances for imported products are as follows:
Once the custom is cleared, the importer will be issued Customs Clearance Approval Certificate (Surat Perintah Pengeluaran Barang or SPPB).
The importer will be able to release the goods from custom by enclosing:
Please refer to this following link, www.beacukai.go.id.
To access this information, importers need to identify the exact Harmonized System (HS) Codes for their imported products. HS Codes can be found on the INSW website, www.insw.go.id.
Indonesian Import-Export Prohibition and Restriction Regulations (Larangan dan/atau Pembatasan Ekspor-Impor or LARTAS) maintain the full details of products restricted from import and export activities. LARTAS information can be found on the INSW website, www.insw.go.id.
All food and drug products such as a drug, traditional medicine, cosmetics, food supplement, and processed food, must fulfill all safety requirements to enter the Indonesian market. This imported food and drug registration is regulated under Indonesian National Agency of Drug and Food Control (BPOM), one of the provisions in the Regulation of the Head of the Agency of Drug and Food Control Republic of Indonesia No. 12 of 2015 concerning the Oversight of Food and Drug Imports into Indonesian Territory.
The registration must be done by the local company, local agent, or distributor before the products cleared to Indonesian customs. To import drug and food, the importer must apply Letter of Import (Surat Keterangan Impor or SKI) to the Head of BPOM.
The procedure to obtain SKI are as follows:
Indonesia is the fourth most populous country in the world with young work force and a large and growing domestic market due to the demographic bonus, making Indonesia one of the world’s leading economies.
Despite heightened global uncertainty, Indonesia’s economic outlook continues to be positive, with domestic demand being the main driver of growth. Supported by robust investment, stable inflation, and a strong job market, Indonesia’s economic growth is forecast to reach 5.2% in 2020.
As the only G-20 member in Southeast Asia and an active voice to develop world concerns, Indonesia plays a more significant role in the global stage. Standard Chartered foresees Indonesia’s entry into the G-7 by 2030, and projects that the Indonesian economy could become the 10th largest by 2020 and the 5th largest by 2030.
Being the world’s 3rd largest flourishing democracy with the largest Muslim populations, Indonesia has a stable policy situation with high commitment to implement structural reforms. Worldwide Governance Indicators Survey conducted by World Bank indicated that Indonesia has improvements in several indicators such as Government Effectiveness, Regulatory Quality, and Control of Corruption.
Indonesia has progressed in Ease of Doing Business over the past few years, with rank of 73 among 190 economies in ease of doing business 2019. In addition to that, Indonesia has leaped to the fourth place, from previously on the eight place, as a prospective investment destination 2017-2019 based on the survey of the United Nations Conference on Trade and Development (UNCTAD).
Indonesia has abundant of natural resources. It also has the second highest biodiversity level in the world after Brazil. Aside from the flora and fauna, Indonesia is a home to many ecosystems. From beaches, small islands, coral reefs, seaweed beds, sand dunes, tidal flats, coastal mud, mangroves and others make Indonesia the most attractive place for investment especially in the tourism sector.
The challenges with Indonesian infrastructure have a lot to do with the geographical realities in the country, as a vast archipelago. The fiscal budget allocated for infrastructure increased more than doubled in the last five years and private sector’s contribution is strongly encouraged and facilitated.
The Government has issued several policies, including the provision of government guarantees, land acquisition for development projects, and viability gap fund for part of Public-Private Partnerships or PPP (Kemitraan Pemerintah dan Badan Usaha or KPBU) project’s construction cost. In addition, the government established some financial institutions to help finance PPP projects and increase their bankability.
As of 2015, Indonesian Government has laid the new focus on several business sectors as planned in The Investment Strategic Planning for the period of 2015 – 2019. These priorities sectors were selected based on the economic advantages, growth factors and productivity aspects. The sectors are as follows:
Most industries and other business fields in Indonesia are open for foreign investments unless mentioned otherwise in the Investment Guidance or previously called the “negative investment list or DNI”. This regulation attaches to the Investment Law under Presidential Regulation No. 44 Year 2016.
Investment together with manufacturing industry and export are expected to be the pillars of Indonesian economy. There are three aspects where investments shall contribute the most to the economy.
First, supporting sustainable economic growth. We seek quality investments, that do not only see Indonesia as a market, but also as a production base. Investments that add value to our natural resources, contribute to our export and substitute our import. We also seek responsible investments that considering environmental and social factors to embrace long term benefit.
Second, creating jobs, improving productivity and competitiveness. Investment in manufacturing sectors is prioritized, especially labor intensive industry, export-oriented and import-substitution industry, and also downstream industry of natural resources.
Third, promoting equal development distribution. We encourage more investments realized outside Java Island, the most populated island in Indonesia. We offer more incentives especially to investments located in eastern part of Indonesia, such as Nusa Tenggara, Maluku, and Papua.
Currently, there are 15 Special Economic Zones (SEZ) in Indonesia. Each of SEZs is developed for specific sectors. The existing SEZs are:
To establish a foreign direct investment company in Indonesia you must first decide what business sector you are going to invest based on Klasifikasi Baku Lapangan Usaha Indonesia “KBLI” (Indonesian Classification for Business Sector).
Then, you must check whether the business sector is open with requirements or closed for foreign direct investment based on the Presidential Regulation No. 44 Year 2016 about “DNI” (Negative Investment List). If the business sector which you are interested in is not regulated, and no other restrictions from related technical ministries, then it means the business sector is open for foreign direct investment with a maximum foreign ownership of 100%.
The legal entity of the FDI Company should be a Limited Liability Company or Ltd. Perseroan Terbatas or PT. The ‘PT’ company should be owned by minimum 2 shareholders. Those can be individual or corporate shareholders or combination of both.
The minimum investment for an FDI company is above IDR 10 billion (excluding land and building cost), while the minimum paid up and issued capital is IDR 2.5 billion. For each shareholder, at least IDR 10 millions or its equivalent in USD is required.
Yes, you can set up a company in any part of Indonesia. However, there are restrictions for some business sectors in certain regions, Industrial Law No. 3 Year 2014 and Government Regulation No. 142 Year 2015 has mandated that any industrial activities shall be located in industrial estates.
Today, the Indonesian Industrial Estates Association (Himpunan Kawasan Industri Indonesia or HKI) has 87 company members, in 18 provinces, covering total gross area of about 86,059 hectares. There are more than 9,950 manufacturing companies operating and these figures do not include industrial estates non HKI members.
Main attractions of industrial estates are that the development is comprehensively planned to assure a strategic location, accessibility, building ratio, infrastructure and supporting services, secured land titles, and continuous maintenance and operation management, as well as integrated environmental management.
The process of company establishment in Indonesia requires Investor to issue Article of Association and legalization of the company, including Taxpayer Identification Number (NPWP), through Public Notary.
Foreign investor could set up a Representative Office to study the market. Foreign Representative Office “KPPA” is an office incorporated by an overseas company to represent themselves in Indonesia.
Foreign Representative Office usually has limited functionalities and are generally prohibited from directly engaging in operational activities, signing contracts, issuing official invoices, receiving payments from its clients, and directly engaging in any other profit generating activities.
The requirement and procedure to form a representative office in Indonesia are governed by BKPM Regulation No. 6 Year 2018 as amended by BKPM Regulation No. 5 Year 2019 regarding Procedures and Guidelines for Licensing and Investment Facility. To obtain the Representative Office license, all requirements should be submitted online at Online Single Submission (OSS) system.
The functionality of KPPA is limited to:
Important Notes for KPPA:
The regulation of Central Bank of Indonesia stated that all banking transactions (such as capital injections, administration of loans, payment of capital equipment, raw materials and others) of a newly established PT. PMA should be administered through a special foreign investment bank account in Indonesia. The required documents to open such account are as follows:
Basically, to start a business in Indonesia, the company should obtain following licenses:
These licenses can be processed through Online Single Submission (OSS) system (www.oss.go.id), an online system created by the Government of Indonesia to simplify the application of business license and other permits.
All new and existing individuals or business entities (include MSMEs), and representative offices can get their business licenses through the OSS system.
Yes, there are. The guidelines are available in Bahasa Indonesia, and can be found on the OSS website (www.oss.go.id) in Informasi’s sub-section, ‘Petunjuk Teknis Pengisian’.
Procedure to get a business license:
Business licenses can be applied online through OSS except for several sectors. The excluded sectors are finance, mining (oil and gas, mineral and coal, and geothermal), and property. For these sectors, licenses can be applied through One Stop Service Center (Pelayanan Terpadu Satu Pintu or PTSP Pusat) BKPM.
Regarding the sectoral business licenses, PTSP Pusat has 3 types of services, they are:
Other than that, PTSP Pusat also provides consultation and complaint services.
PTSP Pusat at BKPM is established to provide a simple, faster, transparent and integrated service for starting business in Indonesia.
At PTSP Pusat, there are Representative Officers from 22 ministries and government institutions that provide consultation and accept application for business licenses which are not included in the OSS.
One Stop Service Center (PTSP Pusat) in BKPM offers activities such as:
Priority Service or “Layanan Prioritas” is a service provided for eligible investors who meet requirements.
Through Priority Service, investors will obtain:
3-Hour Energy and Mineral Resources (ESDM)
8 types of licenses:
The requirement to get this service are:
The exemption from the above criteria are valid for:
Priority Service for ESDM Sector:
No requirements.
Yes. Indonesian Government provides investment incentives.
BKPM Regulation No. 6 Year 2018 as amended by BKPM Regulation No. 5 Year 2019 and Ministry of Finance Regulation No. 176/PMK.011/2009 as amended by Ministry of Finance Regulation No. 188/PMK.010/2015, explained:
All of FDI and Domestic Direct Investment or DDI (Penanaman Modal Dalam Negeri or PMDN) projects which are issued by the OSS system will be granted the exemption of Import Duty, with the final tariffs become 0% (zero percent). This facility would be applicable on:
According to the Regulation of Minister of Finance No. 66/PMK.010/2015, the exemption of import duty will also be granted to the importation of capital goods of electricity for an import period of two years and can be extended by a maximum one year. This facility is not applicable for transmission, distribution, supporting services and repairing equipment.
As stated in the Regulation of Minister of Finance No. 259/PMK.04/2016, the importation of goods in term of Contract of Work or CoW (Kontrak Karya or KK) or Coal Mining Business Work Agreement (Perjanjian Karya Pengusahaan Pertambangan Batubara or PKP2B) will be granted the exemption and/or relief from import duty based on the owned contract. The application can be requested by attaching recommendation letters from Directorate General of Mineral and Coal, Ministry of Energy and Mineral Resources of the Republic of Indonesia.
Tax Allowance based on Government Regulation No.78 Year 2019, regarding to Income Tax Facilities for Capital Investment in Certain Business Fields and/or in Certain Regions, the domestic and foreign investors will be granted for tax allowances in certain business fields and/or regions.
Facilities provided by the Government Regulation No. 78 Year 2019 are:
For detailed information on the list of business sectors that are eligible for Tax Allowance, please refer to the Attachment I & II of Government Regulation No. 78 Year 2019. There are 166 business fields listed in Attachment I and 17 business fields listed in Attachment II.
Note:
The application and provision for tax allowance will be carried out online through the OSS system.
According to the Regulation of Minister of Finance No. 150/PMK.010/2018 and the Regulation of BKPM No. 1 Year 2019 as amended by Regulation of BKPM No. 6 Year 2019, reduction in Corporate Income Tax (Tax Holiday) is given at 100% (one hundred percent) of the amount of the Corporate Income Tax owed with minimum new investment IDR 500 billion and at 50% (fifty percent) with minimum new investment between IDR 100 billion – IDR 499 billion.
The applicant or company should meet the following criteria:
1. The Pioneer Industry:
2. Having status as Indonesian Private/Public Company
3. Having a value of the new investment plan of at least IDR 100,000,000,000 (one hundred billion rupiahs);
4. Having not yet been issued a decision regarding the granting of a notification or concerning the refusal to reduce the Corporate Income Tax by the Minister of Finance.
5. Fulfill the provisions of the amount of the ratio between debt and capital as referred to in the Regulation of the Minister of Finance concerning determining the amount of the ratio between debt and company capital for the purposes of calculating Income Tax.
The period of the reduction is provided with the following conditions:
Note:
BKPM will publish “In Advance Confirmation” which is a notification letter to investors regarding the fulfilment of the requirements of the pioneer industry to obtain a corporate income tax deduction facility for the investors who applied for it.
List of business fields (Indonesia Standard Industrial Classification-KBLI) of the pioneer industry can be seen in the Attachment of the BKPM Regulation No. 6 Year 2019.
GREEN LANE
Starting 2016, the government accelerates custom clearance process for imported capital goods, aiming at speeding up project under construction. Capital goods no longer need screening at the ports. So, it will cut the processing time from five days to only 30 minutes.
WAGE FORMULA
Since September 2015, Indonesian government has issued several economic policy packages, among others, to improve investment climate. We set a minimum wage formula so investors can predict annual increase of wage, considering inflation and economic growth.
OTHERS
We support business to reduce their production costs by cutting the price of fuel, gas, and electricity for industry. We revised the Negative Investment List (DNI) to be more open for foreign investment, specifically intended for industrial, creative economy, and tourism sectors.
In Indonesia, minimum wage is a monthly wage payable to labor. It mainly consists of fixed basic wage that is stipulated by regional governors as a safety net.
The latest Government Regulation No. 78 Year 2015 regarding Wages (GR 78) introduces several important changes, notably those concerning the calculation of provincial minimum wages and the requirement that all employees in Indonesia be paid in Rupiah.
The main points of GR 78 are:
Wage scale and structure in GR 78 requires employers to prepare a wage scale and structure for employees by taking into consideration the group, positions, years of service, education, and competence of employees.
Employers must inform employees of this wage scale and structure, and GR 78 requires that a copy of the wage scale and structure be attached to company regulation registration or renewal applications.
Yes, based on Law of the Republic Indonesia No. 24 Year 2011, employer will have to contribute a certain share based on employee monthly wage into the social security program. The program will provide economic assurance for every employee’s wellbeing.
The new Social Security Agency for Workers and/or Health (Badan Penyelenggara Jaminan Sosial untuk Ketenagakerjaan dan/ atau Kesehatan or BPJS-TK and BPJS-KS) will continue to ensure that employer takes part in the mandatory social security programs such as Pension Guarantee, Life Insurance, and Work Accident Insurance.
For more information on the details to social security pay-out structure, submission of application, working details, and latest updates please directly contact BPJS for Workers at http://www.bpjsketenagakerjaan.go.id/ and BPJS for Health at https://bpjskesehatan.go.id/bpjs/.
Yes, in the framework of investment, foreigners are allowed to hold positions where there are no Indonesian nationals available, or do not meet the requirements and subject to the conditions that such positions are open for foreigners. Foreigners can be employed in Indonesia only for certain positions and period.
Employers of foreign workers in this shall include:
The employers is able to hire foreign workers only for a certain position and a certain time.
Employers of Federal Civil Firm (Firma/Fa), the Limited/Federal Partnership (CV), Associated Business (Usaha Bersama), Trading Company (Usaha Dagang or UD) are prohibited from employing foreign workers except as provided in the Law.
According to Decree of the Minister of Manpower No. 228 Year 2019 concerning Certain Positions Open For Expatriates:
According to Decree of the Minister of Manpower No. 40 Year 2012, foreigner cannot hold a position as:
Companies employing foreigners are charged USD 100 per title per person per month (Article 23 Decree of the Minister of Manpower No. 10 Year 2018).
First of all, employer (either DDI or FDI) should submit Foreign Workers Utilization Plan (RPTKA) application to the Ministry of Manpower of the Republic of Indonesia to get approval through link http://tka-online.kemnaker.go.id.
Once approved, Ministry of Manpower of the Republic of Indonesia will issue RPTKA Endorsement to the employer.
Employee will then be able to apply for Limited Stay Visa (Visa Tinggal Terbatas or VITAS). General requirement for VITAS application as follows:
There are 2 options for VITAS application:
VITAS which is submitted by the employer/guarantor
VITAS which is submitted by the foreign worker
After entering Indonesia, foreign worker should report to the Immigration Office close to their area within 7 days of arrival to get the Limited Stay Permit Card (Kartu Izin Tinggal Terbatas or KITAS). The following procedures also applies to the temporary foreigner workers and expertise, such as specialized technician for temporary repair work, some experts for short-term job position and any affiliated foreigner for specific work function.
Employers who will employ foreign worker shall have an RPTKA. RPTKA is a basis to obtain Foreign Worker Employment Permit (IMTA). In order to receive RPTKA, the employer must submit an online application to the Directorate General of Manpower Placement Development and Job Opportunity Expansion through the Director of Expatriate Worker Utilization Management by enclosing:
Based on Presidential Regulation No. 20 Year 2018 on Foreign Workers Utilization, companies employing foreign workers in the following positions do not need to apply for the RPTKA:
For emergency and urgent work, the Employers of TKA may employ TKA by applying for RPTKA endorsement to the Minister or appointed official not later than two workdays after the TKA is working.
According to the Article 42 paragraph (4) and (5) of Law of the Republic Indonesia No. 13 Year 2003 regarding on Employment, foreign worker can only be employed in Indonesia for a certain position and department.
As a follow up to the above regulation, the Ministry of Manpower Regulation No. 10 Year 2018 regarding Procedures for Licensing Hiring Foreign Workers stipulate. There are certain positions which are prohibited for foreigners Additionally, the employer or sponsor is prohibited from hiring foreign worker who has already working in other company with exception if the foreign worker is appointed as Director or Commissioner in other company as stated in its General Meeting of Shareholders or certain sectors such as vocational education and training, digital economic and also oil and gas.
According to Article 35 of Act of the Republic Indonesia No. 13 Year 2003 about Manpower, employer can recruit a local worker directly or through manpower placement service providers. The manpower placement service provider shall provide protection as from the recruitment to the manpower placement. The employer in employing worker shall provide protection covering welfare, safety, and physical and mental health of the worker.
There are 2 kinds of working relations between employer and employee:
Note:
Please refer to Act of the Republic of Indonesia No.13 Year 2003 for further information.
Yes, it is. Outsourcing is defined as obtaining goods or services by contract from an outside supplier. However, majority of the outsource workers are employed under temporary contract.
Related to this, there will be two definitions of outsourcing:
1. If outsourcing is perceived as the recruitment of workers who directly conducted by the employer with the status of working relationships are specified for certain period and unspecified period work agreement, thus this outsourcing definition is associated with the Article 56-59, Law of the Republic of Indonesia No.13 of 2003 and Decree of Minister of Manpower No. 100/MEN/VI/2004.
Specified period work agreement is for a particular job that will be completed within a specified time, which included in a category, as follows:
Meanwhile, uncertain time work agreement is for the job that does not meet the certain time work agreement’s categories.
2. If outsourcing is understood as obtaining goods or services by contract from outside parties, then outsourcing in this definition must be in accordance with Decree of Minister of Manpower No. 19 of 2012. Outsourcing is divided into two types, which are:
Yes. According to the Article 102 and 103 of Act of the Republic Indonesia No. 13 Year 2003 concerning Manpower, workers and their organizations (unions) shall perform the function of performing their jobs/work as obliged, keeping things in order in order to ensure continued, uninterrupted production, channeling their aspirations democratically, enhancing their skills and expertise and
helping promote the business of the enterprise for which they work and fight for the welfare of their members and families. Every worker has the right to form and become member of a trade/ labor union, and a trade/labor union shall have the right to collect and manage fund and be accountable for the union’s finances.
According to the Article 102 of Act of the Republic Indonesia No. 13 Year 2003 concerning Manpower, in conducting industrial relations, the government shall perform the function of establishing policies, providing services, taking control and taking actions against any violations of statutory manpower rules and regulations.
In the case of industrial relations dispute, employer and labor union should resolve it first through bipartite bargaining in deliberation to reach consensus. In the event the bipartite bargaining failed, then one or both of the parties can file their dispute to the local authorized manpower offices. Further information about industrial relations dispute settlement can be referred to Act of the Republic Indonesia No. 2 Year 2004 concerning Industrial Relations Disputes Settlement.
Yes, labors strike is regulated on the Decree of Minister of Manpower No. 232 Year 2003. According to this regulation, strike is an action that is planned and performed together by workers and/or by trade unions/labor unions in order to stop or slower work. Strike is a basic right of workers and/or trade unions/labor unions that is carried out legally, orderly, and peacefully as a consequence of failed negotiations.
Failed negotiation shall refer to the reaching of no agreement to settle industrial relations disputes because the entrepreneur is unwilling to negotiate even though the trade union/labor union or the worker has submitted a written request for negotiation twice within a period of 14 (fourteen) workdays or because the negotiations lead to a deadlock and this is declared by both sides in the negotiation minutes.
The strike shall be deemed illegal if it is carried out:
Termination of employment is regulated in Chapter XII of Law of the Republic Indonesia No. 13 Year 2003 concerning Manpower. Based on this regulation, the entrepreneur, the worker and/or the trade/labor union, and the government must make all efforts to prevent termination of employment from taking place.
If despite all efforts made termination of employment remains inevitable, then, the intention to carry out the termination of employment must be negotiated between the entrepreneur and the trade/labor union to which the affected worker belongs as member, or between the entrepreneur and the worker to be dismissed if the worker in question is not a union member.
The entrepreneur may only terminate the employment of the worker after receiving a decision (a permission to do so) from the institute for the settlement of industrial relation disputes.
Employer shall be prohibited from discontinuing working relations with the following reasons:
The decision of the institute for the settlement of industrial relation disputes is not needed if:
The investors can buy and own land in Indonesia for a certain period of time using the following rights:
The HGU, HGB, and Hak Pakai can be owned by Indonesian citizens, foreigners residing in Indonesia, corporate bodies established under Indonesian Law and are based/having offices in Indonesia, and foreign companies that have a representative office in Indonesia.
The HGU and HGB ownerships are allowed to change during the contract period. However, Hak Pakai can only be transferred to other parties with the approval of the relevant government official. Hak Pakai owned by an individual can also change hands.
Yes, it depends on the type of the property:
Still based on the same regulation, regarding apartments, foreigners are allowed to purchase an apartment under the Right of Use category, and this is valid for luxurious apartments priced over IDR 10 billion.
FDI companies that are property developers can buy land in Indonesia to develop property. The status of the land is the Building Right (HGB) which will be divided into small lots accordingly. Then, the property buyer can submit an application to change the status of the land to Ownership Rights (Hak Milik) which is only allowed for Indonesian citizens.
