Dezan Shira & Associates have maintained an Alliance partner in Indonesia since 2013 and provide pre-entry advisory, corporate establishment, tax planning, accounting, compliance and audit services throughout the country, managed from offices in Jakarta. Our Alliance Partner firm employs numerous local legal, tax, accounting and audit staff to support this function and are one of the largest firms in the city.
The Indonesian archipelago has been an important trade region since at least the 7th century. Indonesian history has been influenced by foreign powers drawn to its natural resources. Muslim traders brought Islam, while European powers brought Christianity and fought one another to monopolize trade in the Spice Islands of Maluku. Following three and a half centuries of Dutch colonialism, Indonesia secured its independence after World War II.
Indonesia is the world’s third most populous democracy, the world’s largest archipelagic state, and the world’s largest Muslim-majority nation. Current issues include: alleviating poverty, improving education, preventing terrorism, consolidating democracy after four decades of authoritarianism, implementing economic and financial reforms, stemming corruption, reforming the criminal justice system, holding the military and police accountable for human rights violations, addressing climate change, and controlling infectious diseases, particularly those of global and regional importance. Despite all of this, Cambodia remains one of the poorest countries in Asia and long-term economic development will continue to be stymied by endemic corruption, limited educational opportunities, high-income inequality, and poor job prospects. More than 50 percent of the government budget comes from donor assistance, and the major economic challenge for Cambodia over the next decade will be fashioning an economic environment in which the private sector can create enough jobs to handle Cambodia’s demographic imbalance. It currently takes around 101 days to set up a business in the country.
The country is the largest economy in Southeast Asia, and its estimated GDP as of 2013 was US$908.4 billion. The government has promoted fiscally conservative policies, resulting in a debtto-GDP ratio of less than 25 percent and historically low rates of inflation. In December 2011, Fitch and Moody’s upgraded the country’s credit rating to investment grade. Indonesia still struggles with poverty and unemployment, inadequate infrastructure, corruption, a complex regulatory environment, and unequal resource distribution among regions. The government also faces the challenges of quelling labor unrest and reducing fuel subsidies in the face of high oil prices. The average time to set up a business in Indonesia is 52.5 days.
Indonesia has established 20 new development zones as of the end of 2014. These zones include new industrial areas in Bintuni (Papua Province), Pomalaa (Southeast Sulawesi), Batu Licin (South Kalimantan), Kuala Tanjung (North Sumatra), Serang & Cilegon (Banten), Bojonegara (Banten), and Purwakarta (West Java). Other key areas include the Tanjung Lesung SEZ in Banten, which is oncentrated on tourism, and the Sei Mengke SEZ in North Sumatra, which focuses on agro processing and upgrading the port facilities at Dumai and Belawan by the end of 2014.
Please find the full contact information of our Indonesian Asian Alliance Partner here.Dezan Shira Asian Alliance Member in Indonesia
Indonesia passed new immigration laws in 2011, and as a result there are now various options available to foreign workers for obtaining visas and working permits in the country. Indonesia also offers a visa-on-arrival service that is good for stays of up to 30 days, and work permits/visas obtained prior to arrival are typically issued by Indonesia’s Ministry of Manpower. The Ministry also maintains lists of all professional positions in the country that are open to foreign nationals, which includes technicians, directors, managers, field experts, and teachers.
To apply for a work or business visa, your employer must first submit the relevant work permit applications and also obtain government approval to hire you as a foreign worker. To do this, the company must send the Indonesia Investment Coordinating Board (BKPM) a formal request for approval called a Letter of Announcement or an Implementation of Employment Contract Agreement Letter
The employer must also submit a Manpower Utilization Plan for Foreign Workers on your behalf to show how you will be used in the company’s plans. Once all these are approved, the company can then submit a VITAS Visa application (Limited Stay Visa) to the BKPM, which will then issue a Letter of Recommendation to the Department of Immigration to allow you to obtain a visa.
Indonesia allows foreigners to obtain the following types of visas:
Business visas are granted to foreigners who will be conducting business activities (such as attending conferences/seminars) in Indonesia, but do not actually take up an employment position at a company or receive any payments when in the country.
These types of visas typically have a validity period of one year, and are available in both single and multiple entry variants. Multiple entry holders are permitted to stay a maximum total of 60 days in Indonesia, but this 60-day amount can be spread out over the permit’s validity period. Extensions are available for business visas.
Expatriates working in Indonesia on a full-time basis must obtain residence cards called Limited Stay Permit cards (Kartu Izin Tinggal Terbatas, or KITAS) to legally work in the country. A KITAS can be obtained by foreigners employed by Indonesian companies, foreigners married to Indonesian citizens or the children of foreigners who are married to Indonesian citizens. The company looking to hire a foreigner must prove exactly why this foreign worker must work for them during the KITAS application process (i.e., it has to prove that the worker is an expert in the field by way of experience and educational background checks). Additionally, if the Ministry of Manpower accepts the application, a yearly fee of US$1,200 must be paid to them. A KITAS is issued for periods of one year, and is extendable with at least 30 days advance notice.
A KITAP (Kartu Izin Tinggal Tetap) is a permanent stay permit in Indonesia, which can only be issued to investors and workers, retired elderly foreigners older than 55, and foreigners married to Indonesian citizens. Investors and workers are eligible to apply for a KITAP after they hold a KITAS for at least three consecutive years. KITAPs can be obtained for five-year periods, and may be extended for indefinite periods of time
These visas can be obtained directly on arrival when a traveler lands at certain airports and seaports in Indonesia regardless of the purpose of their visit. The visa on arrival is not a work visa or a visitation visa, so it therefore cannot be converted to obtain other immigration permits. The maximum stay permitted on a visa on arrival is 30 days, and can be extended for another 30 days.
You can find extensive collection of Indonesia’s tax treaties from our Knowledge Sharing Platform.