Regulation aims to require work permits for company directors living abroad

IMPACT – LOW

What is the change? According to a new regulation, nonresident directors and commissioners of Indonesian companies who are living abroad may be required to hold work permits.

What does the change mean? Companies should note that it is unclear how this regulation will be implemented, as it appears to contradict other provisions, such as the requirement that work permit applicants hold a residential address in Indonesia. Further discussion and guidance from the Ministry of Employment is expected in coming weeks.

• Implementation time frame: Immediate and ongoing.
• Visas/permits affected: Work permits.
• Who is affected: Nonresident directors and commissioners of Indonesian companies.
• Business impact: The rule could impact directors and commissioners of Indonesian companies living outside Indonesia even if they have no intention of working in Indonesia.
• Next steps: The government is expected to release further details. BAL will update clients when information is available on how the authorities intend to implement the regulation.

Background: The Ministry of Employment issued the regulation June 29, stating that foreign workers who are directors or commissioners of an Indonesian company (or foundation) and who are “domiciled abroad” may need to obtain a work permit sponsored by the entity.

BAL Analysis: As this is a new regulation that has not been fully worked out by local authorities, companies with nonresident directors affected by the regulation should work with their BAL attorney to determine their options while awaiting further guidance on how the Ministry will implement it.

This alert had been provided by the BAL Global Practice group and our network provider located in Indonesia. For additional information, please contact your BAL attorney.

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