Legal Requirements for Hiring Foreigners in Indonesia

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Legal requirements for hiring foreigners in Indonesia. Photograph: Sora Shimazaki via Pexels

Hiring foreign talent in Indonesia can give your business a competitive edge. However, it also means navigating a detailed web of legal requirements for hiring foreigners in Indonesia — from manpower planning to visas, work permits, and compliance obligations. 

If you plan to employ non-Indonesian talent, understanding these requirements upfront can save you time, money, and legal risk.

Prioritize Local Workers (and Know When Foreign Hiring Is Allowed)

Indonesian manpower law emphasizes prioritizing Indonesian workers for job opportunities. 

Foreign nationals may only be employed when there are special needs, expertise gaps, or positions that cannot be reasonably filled by local workers. 

Indonesian regulation requires employers to justify any foreign hire based on workforce conditions and needs.

Foreign Worker Utilization Plan (RPTKA)

A key legal requirement before hiring any expatriate is to prepare a Foreign Worker Utilization Plan, also known as Rencana Penggunaan Tenaga Kerja Asing (RPTKA). This plan outlines:

• The specific job position foreign workers will fill
• Qualifications required
• Reason why local workers cannot fill the role
• Duration of foreign employment

The RPTKA must be validated or approved by the Indonesian Ministry of Manpower before proceeding further in the hiring process.

Work Authorization (Notification) and Stay Permit (VITAS / KITAS)

Once the RPTKA (Foreign Worker Utilization Plan) is officially endorsed by the Ministry of Manpower, employers can proceed to obtain the necessary work authorization and stay permit for the foreign employee.

The RPTKA endorsement, followed by the issuance of a Notification from the Ministry of Manpower, serves as the primary authorization to employ the foreign worker. This Notification is the basis for Immigration to issue the Limited Stay Visa (VITAS).

Upon the foreign worker’s arrival in Indonesia, the VITAS is converted into a Limited Stay Permit (ITAS), and the physical card is known as a KITAS (Kartu Izin Tinggal Terbatas), which grants the TKA (Foreign Worker) the right to reside legally in the country.

Key Points:

• The KITAS is the official residence permit in Indonesia. A KITAS issued based on an approved RPTKA (a working-type KITAS) enables a foreigner to live and work legally in the country.
• Without both a valid RPTKA Endorsement and a KITAS, foreign nationals cannot be legally employed or compensated for work in Indonesia.
• Work authorizations (RPTKA) and Stay Permits (KITAS) are issued on a fixed-term basis, typically aligned with the duration of the employment contract or project requirement.

Read more:

KITAS vs KITAP Indonesia: Meaning, Differences, and How to Apply

Documentation Requirements

Both employers and foreign employees must meet documentation standards. Typical requirements include:

From Employers:

• Valid Indonesian business entity with appropriate licenses
• Approved RPTKA
• Detailed employment contract that complies with local labor law

From Foreign Employees:

• Valid passport (minimum validity typically 18–24 months)
• Proof of health insurance
• Relevant education and work experience documents
• Curriculum vitae and, where applicable, professional certificates

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Employment Contracts and Local Labor Law Compliance

Legal requirements for hiring foreigners in Indonesia. Photograph: fauxels via Pexels

Foreign workers must be hired under written employment contracts that align with Indonesian labor regulations. These contracts must cover:

• Job description
• Salary and benefits
• Working hours and leave entitlements
• Termination conditions

Foreign employees are granted the same labor protections as local employees, including overtime pay, leave rights, and severance where applicable.

Compensation and Contribution Requirements

Employers hiring foreign workers must also:

• Pay the Foreign Worker Placement Fund (DKP-TKA) — commonly assessed as a monthly contribution for each foreign worker.
• Withhold applicable income taxes (e.g., PPh 21) and comply with social security or insurance contributions based on duration of stay and employment agreements.

Transfer of Skills and Reporting Obligations

Indonesia’s regulations require that foreign workers not only perform their job roles but also contribute to technology transfer and skills development for local employees where feasible. 

Employers are often obligated to report annually on foreign worker usage, including training and knowledge transfer activities.

Limitations and Local Workforce Ratio (Emerging Practice)

Recent policy trends aim to protect local jobs. 

Some regulations suggest that employers should maintain a meaningful number of Indonesian employees relative to foreign staff — for example, a general expectation of an Indonesian-to-foreign worker ratio (such as 10:1 in some frameworks) in many industries. 

This is not uniform across all sectors, but employers should assess specific rules relevant to their business.

Risks of Non-Compliance

Failing to meet legal requirements for hiring foreigners can lead to serious consequences, including:

• Deportation of the foreign worker
• Fines or administrative sanctions against the employer
• Suspension or revocation of business licenses
• Damage to corporate reputation

Ensuring full compliance — from RPTKA to KITAS and contractual obligations — is critical to avoid operational disruptions.

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Navigating the legal requirements for hiring foreigners in Indonesia requires careful planning, documentation, and adherence to both immigration and manpower regulations. 

While the framework may appear bureaucratic, it reflects Indonesia’s goal of balancing foreign expertise with protection and opportunities for local workers.

For companies planning to hire foreign talent, engaging experienced immigration and labor law counsel is recommended — particularly to stay updated on regulatory changes and sector-specific rules.