Indonesia seek economic recovery through job creation scheme - | Hudson McKenzie

Indonesia seek economic recovery through job creation scheme

In an attempt to increase employment and ease of doing business, the Indonesian government has introduced a “job creation law” which reduces restrictions on foreign and domestic employment and investment.

In addition, a new government regulation is due to be announced at the end of February 2021 to give up-to-date information on the positions open to foreign workers in Indonesia, along with the period of employment allowed.

Job Creation law

Prior to the job creation law that was passed a few months ago in November 2020, there were certain restrictions on foreign employment and investment in Indonesia. This included rigid labour legislation and difficulties in purchasing land. 

Employees

A “Manpower Utilization Plan” has been put in place as a preliminary work permit approval for foreign nationals who intend to work in Indonesia. This preliminary work permit approval must be gained in order to work in Indonesia and approval must be obtained from the Indonesian Ministry of Manpower.

The following changes to employment have been made:

  • Directors and/or shareholders who have certain ownership percentages in an Indonesian company are exempt from the preliminary work permit approval requirement.
  • Essential employees where production of their company has ceased due to an emergency are exempt from the preliminary work permit approval requirement.
  • Employees who work in the vocation industry, a research industry, conducting a business visit, or running a start-up company based on technology are also exempt from the preliminary work permit approval requirement.
  • Laid-off workers will now receive a severance pay. A company that does not give a severance payment in such situations will be charged under the civil code. 

Investors 

  • Foreign nationals who wish to enter Indonesia for the purposes of investing can do so on a visitor visa.
  • A “second home” visa has been introduced for those who have a second home in Indonesia. Such individuals can also apply for permanent residence under this visa type, should they meet the requirements. 

Should you have any queries regarding the above information or if you require assistance with your corporate, employment or immigration matter, please get in touch with a legal professional at Hudson McKenzie via email at londoninfo@hudsonmckenzie.com or by telephone +44(0) 20 3318 5794.

The information provided does not amount to legal advice.