As the largest economy in Southeast Asia thanks to a growing population and rich natural resources, the Indonesia recruitment market is booming with plentiful job opportunities for both foreign expatriates and especially Indonesian returnees who have worked or studied abroad.
The Indonesian Diaspora and Indonesian Returnees
Indonesians working abroad are known as Tenaga Kerja Indonesia (TKI) with the largest concentrations of overseas Indonesians living or working in Malaysia followed by the Middle East region and Saudi Arabia in particular. In fact, there are a total of 6 million TKIs abroad and Indonesia is among the world’s top ten remittance receiving countries.
There is also a large standing Indonesian Diaspora living in the Netherlands consisting of some 400,000 people, many of whom have lived there for generations, while Singaporean citizens of Indonesian descent also make up a large percentage of the Malay population in Singapore and number some 200,000 individuals. And while many overseas Indonesians in Singapore work as domestic helpers, a large number are also students or work in skilled professional jobs.
In addition, there are close to 150,000 Indonesian-Americans, many of whom are Chinese-Indonesians or Indonesian students who remained in the United States after completing their studies. Indonesian-Americans tend to be concentrated in Southern California as well as Silicon Valley or the Boston area where many have or had chosen to study.
Finally, it’s worth noting that large numbers of Indonesian-Chinese can also be found living and working in Hong Kong, China, other countries in Southeast Asia as well as in Australia and New Zealand. Many of these Indonesian-Chinese had left prior to reforms that lifted a number or political, social and economic restrictions on ethnic Chinese in Indonesia.
For further information about the Indonesian Diaspora, especially those living in the United States, visit the website of the Congress of Indonesian Diaspora.
The Indonesia Recruitment Market
Indonesia’s economic growth has averaged more than 6% annually over the past five years while foreign direct investment (FDI) has soared into the double digits. This economic growth combined with political stability means that the Indonesian recruitment market has attracted large numbers of foreign expatriates with most of the new employment visas being issued to Chinese, Japanese, South Korean Indian, United States and Australian nationals.
It’s also worth mentioning that due to the close geographic, ethnic and cultural ties between Indonesians and Filipinos, the Indonesian recruitment market includes many Filipinos who work in professional, technical and mid to senior level expatriate positions. In fact, Filipino professionals are well suited to work in Indonesia – especially in managerial or technical roles for local Indonesian companies.
Likewise, the Indonesian recruitment market is suffering from shortages of local Indonesians with technical skills or managerial experience – meaning there are opportunities for Indonesian returnees who have studied abroad or have worked in professional positions overseas.
Working in Indonesia
Foreign expatriates coming to work in Indonesia will need to apply for a KITAS (Stay Permit) and an IKTA (expatriate work permit). However, there are strict and somewhat complicated procedures for obtaining an Indonesian work permit and its imperative that the sponsoring employer in Indonesia can assist with obtaining one. When an Indonesian work permit is obtained, a foreign expatriate will be allowed to stay in Indonesia for a period of 1 year from the date of admission to the country with the permit being extendable for 3 consecutive times for 1 year periods each. For further information about Indonesian visas and Indonesian work permits, visit the website of the Indonesian Department of Immigration (or Ditjen Imigrasi Republik Indonesia) or that of The Embassy of The Republic of Indonesia in the United States.
As for Indonesia income taxes, foreign expatriates and returnees should be aware that income tax rates in Indonesia are progressive up to 30% with an additional 20% tax imposed on individuals (other than non-tax residents) who do not posses a tax identification number (NPWP). However, non-resident individuals in Indonesia are subject to a flat tax of 20% of the compensation for work performed in Indonesia regardless of where the compensation was paid while an individual will be considered a resident of Indonesia if they are present in the country for more than 183 days or if they reside in Indonesia during a fiscal year with the intention of staying in the country. Indonesians are also taxed on their worldwide income while non-residents are only taxed on the portion of their income derived from Indonesia. For further information about Indonesia’s tax rates or Indonesian taxes in general, visit taxrates.cc or KPMG’s Taxation of International Executives page for Indonesia.
Finally, it’s worth mentioning that the large influx of foreign expatriates and foreign investors into Indonesia has noticeably driven up the cost of living along with room and occupancy at rates at hotels in Jakarta. Hence, foreign expatriates and Indonesian returnees will need to carefully consider the rising cost of living when it comes time to negotiate suitable compensation packages to work in Indonesia.