Investors No Longer Require a Work Permit in Indonesia

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As of November 1, 2018, the Ministry of Manpower and Immigration has started the implementation of the new work and stay permit application system for foreign workers based on Regulation of Minister of Manpower number 10 of 2018 (MOM Regulation) and Ministry of Law and Regulation number 16 of 2018. In line with the new application system, the foreign investment board, BKPM, has issued regulation 6 of 2018 (BKPM Regulation). In this article we will discuss the option of investors to obtain a limited stay permit (ITAS) without the need to apply for a work permit (RPTKA and notification – previously known as IMTA). An investor is a foreign person who owns shares in a local foreign limited liability company (PT PMA). There are two types of investors in Indonesia: 1) Investors who do not work as a Director or Commissioner (shareholder only), and 2) Investors who hold shares in a PT PMA and also work as Director or Commissioner in the same PT PMA.

Pros and cons of Investor Stay Permit

The main pros and cons of obtaining an investor ITAS are:

  1. Pro: The investor is not required to obtain a RPTKA and notification, which will lead to shorter processing times. Moreover, the investor is not required to pay the mandatory contribution to the Indonesian Manpower Development Fund (DPKK) of US$1,200 per annum.
  2. Con: The investor is not allowed to perform any work in Indonesia. In case an investor needs to work in Indonesia, he/she is required to obtain a work permit through the standard application procedure.
  3. Con: Although not clearly regulated, based on our current understanding it is not possible to include dependents under an investor ITAS. Under a normal ITAS family members (spouses and children) can join the foreign worker in Indonesia using a dependent ITAS. Family members of an investor who wish to join the investor to Indonesia are therefore required to apply for a single-entry visa, with a maximum validity period of 60 days, and which can be extended up to four times, each extension for maximum one month.

Contradiction in MOM Regulation and BKPM Regulation

Based on article 10 (1) of the MOM Regulation, any Investor who holds shares in a PT PMA and who at the same time also serves as Director or Commissioner is not required to obtain a work permit (RPTKA and notification) to work and stay in Indonesia. Article 48 (1) of the BKPM Regulation however only issues a recommendation for a limited stay visa for investors who do not work in Indonesia. At the time of writing, BKPM has not yet regulated a recommendation for investors who hold shares in a PT PMA and also work as director or commissioner. Moreover, based on article 22 (3a) of the Minister of Law and Human Rights Regulation number 51 of 2016, a limited stay visa which is issued for investors does not allow the investor to perform any work activities.

Until the authorities (BKPM and Ministry of Law and Human Rights) issue a new regulation in line with the MOM Regulation, we recommend that investors apply for a work permit (RPTKA and notification), to avoid any problems with manpower officers in case of audits.

Types of stay permits

Currently, there are two types of stay visas available for investors who hold shares in a PT PMA and who do not serve as director or commissioner at the same time:

  1. Index Visa C313: This type of visa is required for investors who wish to opt for a 12-month stay permit. Amongst others, the visa requires a passport with a validity period of at least 18 months and a recommendation from BKPM.
  2. Index Visa C314: This type of visa applies to investors who wish to obtain a 24-month stay permit. The document requirements are almost the same as those of the Index Visa C313, however the minimum passport validity period is set to 30 months.

Application Procedure

Recommendation BKPM

The application for the investor’s ITAS must be submitted offline to BKPM, by completing the required form. After successful submission of the application, BKPM will check the application and within three business days after the successful submission, BKPM will issue a recommendation. A rejection of BKPM will be issued within two business days as of the date of successful submission of the application.

Limited Stay Visa

When applying for the limited stay permit, the investor is not allowed to enter or stay in Indonesia using a single-entry business visa or a multiple entry business visa, because this may lead to a rejection of the limited stay permit application. Once the limited stay visa is issued, the foreign worker can collect the limited stay visa in the Indonesian embassy abroad.

Investor ITAS

Under the new application system, all foreign workers and foreign investors are now required to obtain their ITAS at the immigration checkpoint at the airport, after they have landed in Indonesia. This new procedure does not apply for investors. They will still need to complete a biometric session and collect the investor ITAS at the local immigration office.

Local Registrations

After the investor arrives in Indonesia and has obtained his/her investor ITAS, there are two final local licences which need to be arranged, i.e. the police permit (STM) and the residence permit (SKTTS). For the application of these licences there is no attendance from the investor required and can thus be performed by the agent. Moreover, during the application for these licences, there are no travel restrictions for the investor. The investor is thus allowed to travel inside Indonesia, or to travel abroad during the application.

For more information, please contact PNB Immigration Law Firm at +62 21-22792254, or email us at info@pnblawfirm.com. Visit our website at www.pnbimmigrationlawfirm.com

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