All foreigners who work on projects in Indonesia require a work permit and a stay permit (ITAS). Projects bring extra complexity to the application of work permits and stay permits (ITAS) for the following reasons:
- Special approval from the Directorate General of the Ministry of Manpower. Projects often require a significant number of foreigners to work in Indonesia. This may require a special approval from the directorate general of the ministry of manpower. The application of this special approval requires a detailed preparation from both the company and the agent, to avoid rejection of the application.
- Foreign companies do not have a local presence in Indonesia. Foreign companies often do not have a local entity in Indonesia that can sponsor the work permit of their expats. In that case they have three options available to them:
- Option 1: Setup an entity in Indonesia. Foreign companies can either setup a representative office or a limited liability company (PT PMA) in Indonesia. The process is rather time consuming and is often not the preferred choice in case time is of the essence or in case the foreign company does not wish to have a local presence in Indonesia.
- Option 2: The owner of the project in Indonesia acts as Sponsor. This option is a quick solution and works usually perfect if the owner agrees to become sponsor of the work permits of the expats. However, often project owners are reluctant to provide sponsorship as they will be fully liable as sponsor for all actions of the expats.
- Option 3: Third party sponsorship. A third party with an entity in Indonesia can become sponsor, provided that the business activities are in line with the work activities of the expats. Our group firm, PNB Law Firm, provides third party sponsorship through their Employer of Record services.
TYPE OF WORK PERMITS AVAILABLE
Most projects are for a short to medium term. In addition, during the term of the project we often see a high level of rotation of foreign workers. Therefore in most cases, the following types of work permit and stay permit (ITAS) are used for projects in Indonesia:
- The urgent work and stay permit. This type of permit allows the expat to work and stay in Indonesia for up to 30 days. The application procedure is more streamlined than other types of work permit. Therefore, this type of work permit is perfect for projects where expats need to be deployed as quickly as possible. See also: the detailed explanation and process overview of the urgent work and stay permit.
- The short term work permit. The short term work and stay permit (ITAS) allows a foreigner to work and live in Indonesia for up to six months. On of the main advantages of a short term work permit is that it does not require an Indonesian counterpart. In addition, the ministry of manpower does not require a certain ratio local to foreign workers. This is especially useful for projects with large numbers of expats. Read also: the detailed explanation and process overview of the short term work permit.
The long term work permits are not so used for projects, however they are available if a position requires a long term assignment.