Procedures for Utilizing Expatriate Labor

The Minister of Labor and Transmigration has issued Regulation No. PER.02/MEN/III/2008 in order to synchronize and perfect the previous regulations in this area. The amended regulatory framework is designed to reflect the current situation and developments in regional autonomy that have occurred since 2004. The legal basis for this Regulation is Article 42(1) and Article 43(4) of the Labor Law (Law No. 13 of 2003).

This Regulation will impact on any one who employs expatriate labor as the definition is purposefully broad.

Any employer looking at exploiting expatriate labor must possess a Plan to Exploit Expatriate Labor (Rencana Pengguna Tenaga Kerja Asing / RPTKA). The RPTKA is the basic document that is required to obtain a Permit to Employ an Expatriate (Izin Mempekerjakan Tenaga Kerja Asing / IMTA).

All employers who employ expatriate labor are required to register them in an employee social insurance program and / or provide life insurance.

For an RPTKA to be valid there a number of conditions that must be fulfilled including, among others: the RPTKA form is complete, a permit letter from an approved authority, an appointment letter regarding the Indonesian colleague of the expatriate employee, a copy of the report declaring the employment of the expatriate, and a recommendation regarding the position to be occupied by the expatriate.

The RPTKA will only be complete when it includes data relating to the identity of the expatriate to be employed, the position to be filled and its location in the business structure of the organization, salary level, number of expatriates employed, work location, length of time the expatriate is to be exploited, and an education and training program that is to be conducted by the expatriate (skill and knowledge transfer), among others.

There are special provisions in place for an RPTKA that is deemed to be urgent or for employment of an expatriate in a Special Economic Zone. In essence, the permit will be granted by the Director General after the written application is submitted via the Director.

The expatriate employee must have at least an education and / or five years experience in the field in which they are to be employed, be prepared to transfer the knowledge and skills they have to an Indonesia colleague, and the expatriate must also be able to communicate in Indonesian.

The compensation fee that is payable by every employer that employs an expatriate is to remain at USD 100 per month and this payment is to be made up front. Any part month of employment is to be charged at the rate for a full month.

Expatriate employees cannot be employed in more than one location and hold more than one position. The only exception to this provision is for expatriates who are appointed to multiple Director or Commissioner positions through a General Meeting of Shareholders.

For employers who are going to employ an expatriate holding a permanent residency visa (Kartu Ijin Tinggal Tetap / KITAP) then the employer is required to submit a valid RPTKA, a copy of the KITAP, the bio data of the prospective employee, copies of degrees and a statement of experience, evidence of payment of the compensation fee, a copy of the insurance policy, and three 4x6 color photos.

There are special provisions for any one wanting to employ a karaoke singer or hostess. The maximum period an expatriate can be employed as a karaoke specialist is six months. For every expatriate karaoke specialist there must be five Indonesian karaoke specialists employed at the same venue.

Where an IMTA is not being used for the purposes for which it was issued then the IMTA may be cancelled by the requisite authorities.

All of the forms required to comply with the provisions of this Regulation are attached.

The Regulation has been in force since 28 March 2008.