Work Permits and Immigration Compliance: A Guide to Hiring Foreign Employees in Indonesia

Indonesia’s growing market and dynamic economy present opportunities for global businesses to expand, with hiring foreign employees becoming a crucial part of this strategy. However, ensuring compliance with immigration and manpower laws is essential to avoid legal issues. Key regulations include the Immigration and Manpower Law, which sets the framework for hiring foreign nationals. Employers must follow strict procedures, such as securing a Foreign Employee Utilization Plan (RPTKA) and fulfilling compliance obligations like technology transfer and reporting. While challenges remain, adhering to these requirements enables businesses to successfully tap into global talent and contribute to Indonesia’s economic growth.

Indonesia, with its dynamic economy sand growing market opportunities, presents substantial potential for global businesses seeking to expand or establish a foothold in Southeast Asia. As international companies navigate this promising landscape, hiring foreign employees may become essential to steering the ship in Indonesia. However, ensuring compliance with Indonesia’s immigration and manpower laws is paramount to sidestepping potential legal pitfalls and avoiding operational headaches. This guide outlines the key considerations and essential steps for companies looking to hire foreign employees in Indonesia, enabling businesses to hit the ground running without unnecessary obstacles.

Regulatory Framework

Indonesia’s legal framework for employing foreign nationals is based on several key regulations, which establish the essential guidelines and compliance requirements that companies must adhere to. These key regulations include:

Immigration Law: Law No. 6 of 2011 on Immigration, as partially amended by the Government Regulation in Lieu of Law Number 2 of 2022 and subsequently ratified through Law Number 6 of 2023, including its implementing regulations such as Minister of Law and Human Rights Regulation No. 22 of 2023 on Visa and Stay Permit, as amended by Minister of Law and Human Rights Regulation No. 11 of 2024, serves as the primary legal instrument governing the employment of foreign nationals in Indonesia. These laws outline the procedures for securing stay permits and other related visas required for foreign employees.
Manpower Law: Law No. 13 of 2003 on Employment, as partially amended by the Government Regulation in Lieu of Law Number 2 of 2022 and subsequently ratified through Law Number 6 of 2023, along with implementing regulations such as Government Regulation No. 34 of 2021 on the Use of Foreign Employees (“GR 34/2021”) and Minister of Manpower Regulation No. 8 of 2021 (“MoMR 8/2021”), stipulates specific requirements for employing foreign nationals. These regulations govern the conditions under which foreign employees may be engaged, and set clear expectations for compliance.

foreign employee

Eligibility and Restrictions

Before employing foreign nationals, it is essential to carefully review the provisions outlined in GR 34/2021. This regulation details the criteria for entities permitted to employ foreign nationals, the qualifications required for foreign employees, and the restrictions on certain positions, as explained below:

Eligible Employers: pursuant to Article 3 of GR 34/2021, eligible employers include government agencies, foreign diplomatic missions, international organizations, foreign trade and company representative offices, foreign direct investment companies, legal entities established under Indonesian law (such as limited liability companies and foundations), social and cultural institutions, talent agencies, and business entities permitted by law to employ foreign nationals.
Required qualifications for foreign nationals: pursuant to Article 4 of MoMR 8/2021, foreign nationals must possess relevant educational qualifications and have a minimum of five years of related work experience to be eligible for employment in Indonesia.
Restrictions: the Ministry of Manpower maintains a list of positions that foreign employees are prohibited from holding, including roles that involve personnel management. Additionally, individual legal entities are also barred from employing foreign nationals.

Work Permit

When an eligible employer intends to hire foreign employees in Indonesia—excluding cases where the foreigner is a shareholder, director or commissioner holding shares valued at IDR 10 billion or more—the employer must secure a Foreign Employee Utilization Plan (Rencana Penggunaan Tenaga Kerja Asing or “RPTKA”) approved by the Minister of Manpower. The type of RPTKA required depends on the employer’s entity type, the nature of the work, and the intended length of stay of the foreign employee.

The types of RPTKA are as follows:

RPTKA for Temporary Works.
RPTKA for Works more than 6 (six) Months or Works in Special Economic Zones.
RPTKA for Non-DKPTKA.

It is important to note that, aside from the RPTKA, foreign nationals intending to enter and reside in Indonesia must also obtain a proper visa and stay permit.

foreign employee

Compliance Obligations

Employers must fulfill several compliance obligations when employing foreign nationals in Indonesia, including:

Appointing an Accompanying Local Employee for Technology and Skills Transfer: The employer is required to appoint an Indonesian national as an accompanying employee to facilitate the transfer of technology and skills from the foreign employee. Additionally, the employer must provide appropriate training and education to the local employee in line with the qualifications for the foreign employee’s position.
Facilitating Language Training: The employer must provide Indonesian language training facilities for foreign employees to ensure smoother communication and integration in the workplace.
Reporting: The employer is obligated to notify the immigration authorities of any changes in the foreign employee’s employment, immigration status, or personal details (e.g., civil status, address). Furthermore, the employer must report to the Ministry of Manpower on the utilization of foreign employees, training provided to the accompanying local employees, and the progress of technology and skills transfer.

Conclusion

Hiring foreign employees in Indonesia offers numerous opportunities for businesses seeking to tap into global talent. However, the process requires careful navigation of immigration and manpower regulations to ensure full compliance. By thoroughly understanding the requirements and following the procedures, businesses can successfully integrate foreign employees into their workforce while minimizing legal risks.

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About ADCO Law:

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Disclaimer: This article has been prepared for scientific reading and marketing purposes only from ADCO Law. Accordingly, all the writings contained herein do not constitute the formal legal opinion of ADCO Law. Therefore, ADCO Law should be held harmless of and/or cannot be held responsible for anything performed by entities who use this writing outside the purposes of ADCO Law.