30 Nov 2020
Omnibus Law and Draft Regulation Relax Immigration Rules for Investors and Second Homers

This is the ninth in our series of ABNR Legal Updates on the Job Creation Law, which entered into force on 2 November 2020. This time we look at the changes the Job Creation Law makes in the immigration sector.

A Draft Government Regulation (“DGR”) on the immigration provisions of the Job Creation Law (“JCL”, or Omnibus Law, as it is familiarly known),[1] has been published as part of a public consultation process. JCL makes a number of significant changes to the 2011 Immigration Law (the key legislation in the sector),[2] which have now been further elaborated in the DGR.

It is important to note, however, that nothing is certain until such time as the DGR has actually been issued. Thus, the information provided in this update is subject to change, although we expect any changes to be minimal.

As regards the timeline for promulgation of the DGR, JCL sets a deadline of 3 months for the issuance of all of its ancillary / implementing regulations, meaning that they should officially be on the statute book by early February. Of course, whether or not this deadline is met depends entirely on the Government.

KEY CHANGES

1. Addition of “Pre-Investment” Category to List of Grounds for Visit Visas

Prior to the amendment of the Immigration Law by JCL, visit visas (Visa Kunjungan) to Indonesia could be granted for the following purposes:

official government business; education; socio-cultural purposes; tourism; business; family purposes; journalism; and stopovers while in transit to another country

To this list has now been added a further category, namely, visits made for “pre-investment purposes.” This is obviously a very broad term and should be sufficient to cover just about all preliminary activities undertaken with a view to investing in Indonesia, from the feasibility investigation stage up to the commencement of the investment’s rollout. As with the existing business visa, the new pre-investment visa may also be granted on a multiple entry basis.

On the downside, however, a sum of money will need to be posted as an immigration bond as a pre-condition for the granting of a pre-investment visa(for more information on immigration bonds, see Section 3 below).

While many of the activities inherent in the term “pre-investment” would already have been covered by the business-visa category, the specific recognition of “pre-investment purposes” as grounds for obtaining a multiple entry visa should facilitate early-stage visits to Indonesia by potential investors, such as those coming here on scouting missions.

However, as no further information is provided in either JCL or the DGR on the exact extent of “pre-investment,” we will have to await the issuance of the relevant ministerial regulations before we will know precisely what the Government envisages.

2. Changes to Rules on ITAS

JCL and the DGR envisage a number of potentially important changes to the rules on temporary stay permits (Izin Tinggal Terbatas / “ITAS”), which may be summarized as follows:

  1. Maximum duration of ITAS to increase from 2 years (extendable) to 5 years (extendable) – unfortunately there is no further information in DGR on this and thus it is impossible to say at this stage whether the proposed change will benefit expat employees.

  2. Previously, an expat could only have an ITAS for a maximum continuous period of 6 years. After that, they would need to go through the process of obtaining a new ITAS in order to continue working. By contrast, it would appear that there is no longer any limitation on the length of time an expat may work in Indonesia based on an ITAS. Once again, however, there is no further information on this in the DGR and so we will have to await the issuance of a ministerial regulation to fill in the details.

3. Foreign Investor No Longer Needs Sponsor for Stay Permit

A significant change under JCL is that a sponsor is no longer required by a foreign investor (or a foreigner whose country extends reciprocal rights to Indonesians) should they wish to reside in Indonesia as a temporary resident (on an ITAS or ITAP). However, the investor will need to post a sum of money as an “immigration bond” (jaminan keimigrasian) to replace the promises and undertakings usually given by a sponsor (for example, that the foreigner will comply with immigration law, and that guarantor will cover any costs that might arise in relation to the foreigner’s immigration status, such as the cost of their deportation / repatriation, etc.). There is no information yet as to how much money will need to be deposited as a bond.

4. New Residency Scheme for Second Homers

Under the pre-amendment Immigration Law, what are referred to in the legislation as “elderly people” (orang lanjut usia) were entitled to reside in Indonesia on a temporary basis (ITAS) or permanent basis (ITAP) as part of the country’s efforts to emulate the Philippines and Thailand as a retirement destinations. This category has now been abolished and replaced by a new and significantly broader category that is aimed at foreigners who wish to make Indonesia their second home (rumah kedua). Of course, in order to qualify as a “second homer,” certain criteria will need to be complied with. According to the DGR, these include:

  1. posting of immigration bond;
  2. presentation of a certificate of good character from the authorities in the person’s home country; and
  3. submission of medical check-up results.

Further details on these criteria will presumably be provided subsequently by ministerial regulation.

As regards a temporary stay permit (ITAS) for a second homer, JCL states that it may be issued for 5 or 10 years. However, there is no information on how the duration of the permit will determined.

The new category of stay permit is available to not just the second homers themselves but also to their immediate family members.

By employment partner Mr.Indra Setiawan (isetiawan@abnrlaw.com) and counsel Mr.James Boyd (jboyd@abnrlaw.com).

[1] Law No. 11 of 2020 on Job Creation (Undang-Undang Nomor 11 Tahun 2020 tentang Cipta Kerja).

[2] Law No. 6 of 2011 on Immigration (Undang-Undang Nomor 6 Tahun 2011 tentang Keimigrasian).

This ABNRNewsand its contents are intended solely to provide a general overview, for informational purposes, of selected recent developments in Indonesian law. They do not constitute legal advice and should not be relied upon as such. Accordingly, ABNR accepts no liability of any kind in respect of any statement, opinion, view, error, or omission that may be contained in this legal update. In all circumstances, you are strongly advised to consult a licensed Indonesian legal practitioner before taking any action that could adversely affect your rights and obligations under Indonesian law.

More Legal Update

NEWS DETAIL

Back

30 Nov 2020
Omnibus Law and Draft Regulation Relax Immigration Rules for Investors and Second Homers

This is the ninth in our series of ABNR Legal Updates on the Job Creation Law, which entered into force on 2 November 2020. This time we look at the changes the Job Creation Law makes in the immigration sector.

A Draft Government Regulation (“DGR”) on the immigration provisions of the Job Creation Law (“JCL”, or Omnibus Law, as it is familiarly known),[1] has been published as part of a public consultation process. JCL makes a number of significant changes to the 2011 Immigration Law (the key legislation in the sector),[2] which have now been further elaborated in the DGR.

It is important to note, however, that nothing is certain until such time as the DGR has actually been issued. Thus, the information provided in this update is subject to change, although we expect any changes to be minimal.

As regards the timeline for promulgation of the DGR, JCL sets a deadline of 3 months for the issuance of all of its ancillary / implementing regulations, meaning that they should officially be on the statute book by early February. Of course, whether or not this deadline is met depends entirely on the Government.

KEY CHANGES

1. Addition of “Pre-Investment” Category to List of Grounds for Visit Visas

Prior to the amendment of the Immigration Law by JCL, visit visas (Visa Kunjungan) to Indonesia could be granted for the following purposes:

official government business; education; socio-cultural purposes; tourism; business; family purposes; journalism; and stopovers while in transit to another country

To this list has now been added a further category, namely, visits made for “pre-investment purposes.” This is obviously a very broad term and should be sufficient to cover just about all preliminary activities undertaken with a view to investing in Indonesia, from the feasibility investigation stage up to the commencement of the investment’s rollout. As with the existing business visa, the new pre-investment visa may also be granted on a multiple entry basis.

On the downside, however, a sum of money will need to be posted as an immigration bond as a pre-condition for the granting of a pre-investment visa(for more information on immigration bonds, see Section 3 below).

While many of the activities inherent in the term “pre-investment” would already have been covered by the business-visa category, the specific recognition of “pre-investment purposes” as grounds for obtaining a multiple entry visa should facilitate early-stage visits to Indonesia by potential investors, such as those coming here on scouting missions.

However, as no further information is provided in either JCL or the DGR on the exact extent of “pre-investment,” we will have to await the issuance of the relevant ministerial regulations before we will know precisely what the Government envisages.

2. Changes to Rules on ITAS

JCL and the DGR envisage a number of potentially important changes to the rules on temporary stay permits (Izin Tinggal Terbatas / “ITAS”), which may be summarized as follows:

  1. Maximum duration of ITAS to increase from 2 years (extendable) to 5 years (extendable) – unfortunately there is no further information in DGR on this and thus it is impossible to say at this stage whether the proposed change will benefit expat employees.

  2. Previously, an expat could only have an ITAS for a maximum continuous period of 6 years. After that, they would need to go through the process of obtaining a new ITAS in order to continue working. By contrast, it would appear that there is no longer any limitation on the length of time an expat may work in Indonesia based on an ITAS. Once again, however, there is no further information on this in the DGR and so we will have to await the issuance of a ministerial regulation to fill in the details.

3. Foreign Investor No Longer Needs Sponsor for Stay Permit

A significant change under JCL is that a sponsor is no longer required by a foreign investor (or a foreigner whose country extends reciprocal rights to Indonesians) should they wish to reside in Indonesia as a temporary resident (on an ITAS or ITAP). However, the investor will need to post a sum of money as an “immigration bond” (jaminan keimigrasian) to replace the promises and undertakings usually given by a sponsor (for example, that the foreigner will comply with immigration law, and that guarantor will cover any costs that might arise in relation to the foreigner’s immigration status, such as the cost of their deportation / repatriation, etc.). There is no information yet as to how much money will need to be deposited as a bond.

4. New Residency Scheme for Second Homers

Under the pre-amendment Immigration Law, what are referred to in the legislation as “elderly people” (orang lanjut usia) were entitled to reside in Indonesia on a temporary basis (ITAS) or permanent basis (ITAP) as part of the country’s efforts to emulate the Philippines and Thailand as a retirement destinations. This category has now been abolished and replaced by a new and significantly broader category that is aimed at foreigners who wish to make Indonesia their second home (rumah kedua). Of course, in order to qualify as a “second homer,” certain criteria will need to be complied with. According to the DGR, these include:

  1. posting of immigration bond;
  2. presentation of a certificate of good character from the authorities in the person’s home country; and
  3. submission of medical check-up results.

Further details on these criteria will presumably be provided subsequently by ministerial regulation.

As regards a temporary stay permit (ITAS) for a second homer, JCL states that it may be issued for 5 or 10 years. However, there is no information on how the duration of the permit will determined.

The new category of stay permit is available to not just the second homers themselves but also to their immediate family members.

By employment partner Mr.Indra Setiawan (isetiawan@abnrlaw.com) and counsel Mr.James Boyd (jboyd@abnrlaw.com).

[1] Law No. 11 of 2020 on Job Creation (Undang-Undang Nomor 11 Tahun 2020 tentang Cipta Kerja).

[2] Law No. 6 of 2011 on Immigration (Undang-Undang Nomor 6 Tahun 2011 tentang Keimigrasian).

This ABNRNewsand its contents are intended solely to provide a general overview, for informational purposes, of selected recent developments in Indonesian law. They do not constitute legal advice and should not be relied upon as such. Accordingly, ABNR accepts no liability of any kind in respect of any statement, opinion, view, error, or omission that may be contained in this legal update. In all circumstances, you are strongly advised to consult a licensed Indonesian legal practitioner before taking any action that could adversely affect your rights and obligations under Indonesian law.