Foreign direct investment and foreign workers in Indonesia do encourage exchange of best business practices

Besides being part of foreign direct investment, the presence of foreign workers in Indonesia ‘s business sectors is important to encourage an exchange of best business practices that allow local companies and human resources to thrive by learning from what their international counterparts are doing.

Besides being part of foreign direct investment, the presence of foreign workers in Indonesia ‘s business sectors is important to encourage an exchange of best business practices that allow local companies and human resources to thrive by learning from what their international counterparts are doing.

According to data from the Manpower Ministry, Indonesia currently issues work permits to less than 100,000 foreign workers in the country for positions such as foremen, supervisors, managers, senior executives and consultants. This number is negligible compared to the country’s workforce of 125 million people.

Building a business/investment-friendly environment is of importance to attract both domestic and foreign investment, as well as foreign talents, to spur the country’s long-term investment-based economic growth. President Joko “Jokowi” Widodo once put it that the government was continuously improving, making it easier to conduct business in Indonesia to attract investment and retain foreign talents to move the country’s economic wheels forward.

To reiterate his commitment to accelerating the growth of Indonesia’s economy through foreign investment, Jokowi issued Presidential Decree No. 20/2018 on the simplification of work permit issuance for expatriate workers in order to boost the national economy and job creation through such investment activities.

Read about all you need to know visa for foreign investors in Indonesia

Many strategies have been pursued to attract foreign talents to work in Indonesia. One important strategy is the simplification of business permit issuance, which is highly important to retain foreign talents in a country that is currently striving to reform its bureaucratic red tape.

Currently, the process of simplifying the issuance of foreign workers’ business permits is managed by the Investment Coordinating Board (BKPM), along with relevant ministries and regional administrations. The BKPM has supported foreign investment sincec the establishment of its one-stop service center three years ago.

The Manpower Ministry, meanwhile, did its part in supporting the implementation of the newly launched presidential regulation by coordinating with the Law and Human Rights Ministry to jointly develop an online system for foreigners’ work permit applications.

The new presidential regulation annulled Presidential Regulation No. 72/2014, integrating the procedures for temporary stay, work as well as investment permits under one roof through an online system.

Thanks to this integrated system, expatriate workers can have the three aforementioned documents issued in one administrative procedure, with the documents issued in just six working days. Previously, the compartmentalized administrative processes for the documents would see them issued within 40 days.

Although the administrative procedures for the permits have been simplified by the ministries, resulting in the faster issuance of documents, they still follow rigorous and meticulous procedures to reinforce compliance with Indonesian immigration and labor laws.

Besides moving the application procedures fully online, the ministries have also simplified the application process, by no longer requiring foreign workers to obtain a recommendation letter from their employers to get work, temporary stay or investment permits in Indonesia. Instead, the Manpower Ministry issued a general guideline outlining job descriptions and positions that are open for expatriates and those that are reserved for local workers, thus doing away with the requirement for foreign workers to submit a recommendation letter from their employers.

To further simplify the issuance processes for these documents, the ministries have also decided to annul the requirement for foreign workers to obtain a business license prior to working in Indonesia; as long as they work for companies that already have a business license number registered in the online single submission system, they will be eligible to obtain those permits in Indonesia.

In addition to that, employers no longer have to renew their foreign worker employment plan, unless they change their company address, name, business line or the business locations where these foreign workers operate. For employers to get the ministries’ approval for their foreign worker employment plan, they only have to submit the required documents and wait for the ministries to approve their requests within two working days. The verification process of the application involves an online document checking system as well as phone or video interviews. Notifications on the results of the approval process are sent via email.

Shareholders who also serve as members or commissioners on an employer’s board of directors will also be exempted from the obligation to pay the government the compensatory expertise and skills development fee. Foreign workers can become members of a board of directors as well as commissioners in the following industrial sectors: education, vocational training, digital economy as well as oil and gas.

The two ministries conduct legal supervision on foreign workers in Indonesia by monitoring both the foreign employees as well as their employers. The ministries pay close attention to whether the employers comply with the regulations applied by the Manpower Ministry. Meanwhile, immigration officers will pay close attention to individual foreign workers with regard to their compliance with Indonesian immigration rules and regulations.

The Manpower Ministry will impose administrative punishments on employers violating local regulations on foreign workers. Those punishments include a withholding of services from the ministry and temporary revocation of foreign worker recruitment permits. The ministry will also apply civil or criminal procedures on employers who have violated the law on the employment of foreigners.

Recent Articles