Indonesia
Foreign domiciled directors and commissioners must have Indonesian work permit

The newly issued Indonesian Ministry of Manpower Regulation No. 16 of 2015 regarding Procedures to Utilize Foreign Manpower (New Regulation) has replaced the contentious Minister of Manpower Regulation No. 12 of 2013 regarding the same (Old Regulation).

The Old Regulation was known mostly for its provision that the Government would introduce an online Indonesian-language proficiency test for foreign workers, which never came to pass.

With the New Regulation the Government has dropped the provision on Indonesian-language proficiency tests for foreign workers. That should, for the time being at least, end discussion of foreign nationals being required to master Indonesian before they are able to obtain a work permit.

But the New Regulation may not be all good news. One point in particular stands out, with the Government creating a new requirement for members of the Board of Directors (BOD) and Board of Commissioners (BOC) of Indonesian companies, and the Board of Patrons, Board of Management and Board of Supervisors of Indonesian foundations who are domiciled abroad to obtain a work permit in Indonesia.

As a bit of background, this point of requiring overseas members of the BOD and BOC of companies in Indonesia to have an Indonesian work permit is one of the most frequent requests by manpower officials when they conduct an inspection. There had been no legal basis for this request until the New Regulation created one for the Ministry of Manpower to require Indonesian work permits for overseas-based BOD and BOC members, among others.

What is disconcerting and not clear in the New Regulation is whether there is a transition period for compliance with this provision or potential sanctions for noncompliance.

It is also important to note that the work permit requirement will have a significant impact on foreign workers in Indonesia and companies that employ them. Foreign nationals who work in Indonesia for more than six months must have a tax registration number, evidence of insurance from a local insurance company, social security contributions under the BPJS and evidence of payment of US$100 per month per foreign worker to the Indonesian Workers Skill Development Fund (Dana Pengembangan Keahlian dan Ketramplian or DPKK).

The New Regulation came into effect on June 29, 2015.

www.ssek.com

Related Articles by Firm
Indonesian government imposes VAT on imported digital goods and services
The tax particularly targets intangible goods and services provided by foreign tech companies that lack a physical presence in Indonesia.
Indonesia’s New Negative Investment List
Presidential Regulation No. 44 of 2016 regarding the List of Business Fields That Are Closed and Business Fields That Are Conditionally Open...
Revisiting the Indonesian Language Law
Indonesia’s Law No. 24 of 2009 regarding the National Flag, Language, Emblem and Anthem (the Language Law) was very likely ...
Indonesia Update
New Body Set Up to Resolve Disputes in the Construction Sector; and a Change to the Mediation Process ...
Indonesia’s Anti-Monopoly Law: Changes Ahead?
Since its enactment in 1999, Indonesia's Anti-Monopoly Law has never been amended. The New Anti-Monopoly Law has been prioritized for enactment by the Government of Indonesia. Here's a look at some proposed major changes.
Non-compete agreements and protecting confidential information
Indonesian labour and employment laws do not expressly impose or regulate non-competition obligations ...
Indonesian regulatory framework for real estate investment funds
In late 2015, the Indonesian Minister of Finance issued Regulation No. 200/PMK.03/2015 regarding Tax Treatment of Taxpayers and Taxable Entrepreneurs ...
Indonesia Widens Door to Foreign Investment
Indonesia released its tenth economic policy package on February 12, 2016, with a focus on boosting foreign direct investment and protecting small and medium enterprises and cooperatives.
Indonesian Import License Regulations
The Indonesian Minister of Trade issued two new regulations which amended importation guidelines effective 1 January 2016.
Ownership of homes or residences by foreigners in Indonesia
Indonesia issued Government Regulation No. 103 of 2015 regarding the Ownership of Homes or Residences by Foreigners Residing in Indonesia ...
When employees leave: non-compete agreements and protecting confidential information
Indonesian labour and employment laws do not expressly impose or regulate non-competition obligations of employees with the exception of the Chief Representative ...
New regulations bring big changes to the Indonesian manpower sector
Two recently released regulations have introduced important changes to the Indonesian manpower sector. While the changes should generally be welcomed by the business ...
Update: Guide to Background Checks in Indonesia
Background checks on employees are not expressly regulated by Indonesian employment laws but certain background checks are subject to the applicant or employee's consent.
Foreign investment restrictions in Indonesia
Restrictions on foreign shareholders in Indonesia are set out in the most recent Negative Investment List, contained in Presidential ...
New Manpower Regulation Eliminates Controversial Work Permit Requirements in Indonesia
Indonesia eases requirements for work permits of expatriates working in the country.
Establishing a presence from abroad
The most common option for an overseas company as a foreign investor to establish a presence in Indonesia is by setting up a limited liability company (Perseroan Terbatas or PT) with foreign ownership ...
Regulatory framework for insurance business
The main legislation for insurance and reinsurance business in Indonesia is the newly enacted Insurance Law, issued on October 17, 2014. The new Insurance Law ...
Indonesian Rules on E-Signatures
E-signatures in Indonesia are regulated by Law No. 11 of 2008 regarding electronic information and transactions (Law No. 11/2008) and Government Regulation No. 82 of 2012 regarding the implementation ...
Negative investment list vs. cabotage principle
In furtherance of Indonesia’s commitment to welcome the implementation of the ASEAN Economic Community (AEC) in 2015, ...
Local Authority Curbed in Indonesian Mining Sector
The Indonesian Government appears to be getting serious about stripping local authorities of the power to issue mining licenses.
Mandatory use of Rupiah in Indonesia
Indonesia’s central bank, Bank Indonesia (BI), recently issued BI Regulation No. 17/3/PBI/2015 regarding the mandatory use …
Indonesia: New Regulation on Public-Private Partnerships (PPP)
Public-private partnerships (“PPPs”) interest infrastructure investors in Indonesia for a number of reasons ...
Compliance road map for companies
Compliance is an important issue for foreign investment companies doing business in Indonesia. As international organisations, foreign investment companies are not only …
Food export regulations and licences
Export activities in Indonesia can be carried out by individuals, institutions and business entities. Export goods are classified as free export goods, which are goods that have no restrictions or prohibitions on …
Franchising rules and regulations
With a population of over 250 million, Indonesia is an attractive country for investors, particularly those interested in the distribution, retail and franchise sectors. …
Indonesia Employment Law: Quarterly Review
Update for the 4th quarter of 2014 including: Increased Protection for Outsourced Workers; New Rules on Hiring Expatriates; and Regulations for those Employed in Oil and Natural Gas Business Activities...
New Indonesian Geothermal Energy Law
Indonesia is one of the world’s most volcanically active countries and among the countries with the greatest geothermal energy potential. Dwindling production of traditional energy …
Foreign investment in Indonesian real estate
Indonesia’s Agrarian Law provides that foreigners can only acquire right to use (hak pakai) title for land if they reside in Indonesia. If foreign investors wish to engage in …
Employment Law: Hiring expats, holidays and more
The Indonesian Government has issued a Regulation on the employment of foreign workers and the implementation of education and training programs for Indonesian companion employees. Presidential …
New Negative List Introduces Changes to Health Investment in Indonesia
The Indonesian Government has released a new list of business fields that are closed to investment and business fields that are conditionally open to investment …
Indonesian-language label requirements
The Minister of Trade has updated Regulation No. 67/M-DAG/PER/11/2013 regarding the Obligation to Affix Indonesian-Language Labels on Goods with the issuance of Minister of Trade Regulation No. 10/M-DAG/PER/1/2014 …
Corporate liability for corruption
Anti-corruption compliance is rightly a focus of companies operating in Indonesia. One of the more interesting questions for such companies, particularly foreign investment companies, is whether the company …
Indonesia’s New Negative Investment List
The Indonesian Government has issued a New Negative List that determines which business fields are open, fully or partially with conditions, to investment, including foreign investment. The New Negative List, issued …
New Trade Law and its effect on business
Indonesia’s House of Representatives (Dewan Perwakilan Rakyat or DPR) recently passed into law a long-awaited trade bill. The new Trade Law will act as an underlying regulation for other trade-related …
Processing minerals for export now mandatory
After a long and contentious discussion involving many interested parties, the Government of Indonesia issued a regulation that bans the …
Indonesia’s Language Law and business agreements
In a landmark decision on June 20th, 2013, the West Jakarta District Court annulled a Loan Agreement because it was executed in English …
Indonesian Court Annuls Loan Agreement on Language Law: What Does It Mean for Your Agreements?
In a landmark decision on June 20, 2013, the West Jakarta District Court annulled a Loan Agreement entered into between a local borrower and an offshore lender because it was executed in English only ...
Keeping up with shifting foreign investment rules
Less than six months after issuing new investment guidelines and procedures, Indonesia’s Capital Investment Coordinating Board (BKPM) has …
New divestment rules for mining companies
On September 13th, 2013, the Minister of Energy and Mineral Resources (MEMR) issued MEMR Regulation No. 27 of 2013 regarding …
New import rules for cell phones in Indonesia
Indonesia’s Minister of Trade has issued a new regulation that specifically governs the importation of, among other items, cellular telephones …
BKPM introduces new investment rules in Indonesia
Indonesia’s Capital Investment Coordinating Board (BKPM) has issued BKPM Regulation No. 5 of 2013 regarding Guidelines and Procedures …
Related Articles
"You can’t manage what you don’t measure"
….so said a General Counsel in a recent discussion we had about the use of data in their legal department.
Electronic signatures and virtual meetings — the Bermuda, British Virgin Islands and Cayman Islands legal framework
The introduction globally of travel restrictions and containment measures arising from Covid-19 has significantly disrupted business, including creating logistical issues in closing corporate or financing transactions or holding board and shareholders’ meetings ...
Related Articles by Jurisdiction
Navigating a shifting landscape
In the ongoing transformation of Asian capital markets, money flows are changing direction and new industries are rising across the region. But Hong Kong and Singapore regulators still set the pace, reports Eric J. Brooks.
The thing about … Dr Mohamed Idwan Ganie
In the third of a quarterly feature, ASIAN-MENA COUNSEL's Patrick Dransfield talked to Dr Mohamed Idwan (Kiki) Ganie, Managing Partner, Lubis Ganie Surowidjojo (LGS) Indonesia, and put to him a series of questions on behalf of ...
Latest Articles
"You can’t manage what you don’t measure"
….so said a General Counsel in a recent discussion we had about the use of data in their legal department.
Are you ready for the global tax reform?
A brief discussion on how MNCs should respond to the OECD’s new measures relating to Automatic Exchange of Information and Transfer Pricing issues