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INDONESIA - Amendments to Regulations for Work Permit Exemption for Foreign National Shareholders in Indonesian Companies

The Indonesian investment board (BKPM) has amended its regulations to clarify that foreign national shareholders in Indonesian companies who also work as Directors or Commissioners for the same company qualify for an exemption allowing them to work in Indonesia without a work permit.

Background

The previous regulation, from 2018, introduced the possibility for qualifying foreign investors to obtain a limited stay visa (VTT) and limited stay permit (ITAS) without first applying for a work permit (RPTKA, Notification – previously known as IMTA) and without paying the mandatory contribution to the Manpower Development Fund (DPKK – USD 1200 per year).

An investor is a foreign national who owns shares in a local foreign limited liability company (PT PMA) and either may or may not work as a Director or Commissioner in the same PT PMA.

The 2018 regulation stated that the recommendation for Limited Stay Visa (VTT) issued by BKPM is for foreign national shareholders who have no intention to work in Indonesia. The regulation was not clear whether this process also applied to shareholders who work as Directors or Commissioners for the same PT PMA.

Changes

The new regulation clarifies that the recommendation for Limited Stay Visa (VTT) issued by BKPM also applies to foreign national shareholders who work as Directors or Commissioners in the same PT PMA, and therefore allows them to work in Indonesia without applying for a work permit.

The 2019 regulation also introduces a requirement that foreign investors hold a minimum number of shares, in order to be able to apply through BKPM. There was no such requirement in the 2018 Regulation.

Shareholders who serve also as directors or commissioners of the company must hold at least IDR 1 billion rupiah (or USD equivalent); Shareholders who do not serve as directors or commissioners of the company must hold at least IDR 1.125 billion rupiah (or USD equivalent). The regulation does not clarify if dependents can be included in the recommendation for VTT. Under the 2018 Regulation it was not possible to apply for a dependent ITAS, and they were required to apply for a visit visa.

Action Items

Employers who may be affected are encouraged to contact a Newland Chase immigration specialist for case-specific advice.

This alert was prepared with information provided by PNB Immigration Law Firm.

DISCLAIMER: The information contained in this immigration alert has been abridged from laws, court decisions, and administrative rulings and should not be construed or relied upon as legal advice. If you have specific questions regarding the applicability of this information, please contact Peregrine © 2019 Peregrine Immigration Management Ltd.