Our Services · Foreign Businesses & Expatriate Employment
Legal Counsel for Foreign Businesses in Indonesia
Doing business in Indonesia means working under Indonesian law, in the Indonesian language, through Indonesian procedures. We advise foreign companies and foreign-owned (PMA) companies on debt recovery, contracts, disputes, and compliance when employing foreign workers.
Risks foreign businesses most often face
- A local partner keeps delaying payment, and you are unsure which recovery routes exist in Indonesia.
- A partner or debtor is placed under PKPU, while the announcements are published only in Indonesia and in Indonesian.
- A contract exists only in English, although one of the parties is an Indonesian company.
- The employment of foreign workers is not fully compliant, and this only surfaces during an inspection or a dispute.
- An expatriate's employment needs to end early, or the company is being restructured.
One point of contact for your legal needs
| Need | Service |
|---|---|
| Recovering receivables from an Indonesian partner | Debt Recovery in Indonesia |
| A partner or debtor in PKPU or bankruptcy | Creditor Representation in PKPU and Bankruptcy |
| Contracts with Indonesian parties, including bilingual texts | Commercial Contract Review and Drafting |
| Commercial disputes, arbitration, and enforcement of foreign arbitral awards | Commercial Disputes and Litigation |
| Compliance and disputes involving foreign workers | See below |
Foreign workers: compliance and disputes
We focus on the legal side of employing foreign workers (tenaga kerja asing, or TKA): making sure the employer's obligations are met, drafting the employment contracts, and handling issues as they arise. These are the core obligations under Law No. 13 of 2003 on Manpower, as amended by Law No. 6 of 2023.
| Obligation or prohibition | Basis |
|---|---|
| An employer of foreign workers must hold a foreign worker utilisation plan (RPTKA) approved by the Central Government | Article 42(1) |
| Individual employers may not employ foreign workers | Article 42(2) |
| Foreign workers may be employed only in an employment relationship, for a specific position and a specific period, and must have competence matching the position | Article 42(4) |
| Foreign workers may not hold positions dealing with personnel (HR) matters | Article 42(5) |
| The employer must appoint an Indonesian counterpart, provide training, and repatriate the foreign worker when employment ends | Article 45(1) |
| The employer must pay a compensation fee for each foreign worker employed | Article 47(1) |
| A fixed-term employment contract must be in Indonesian; if it is bilingual and the versions differ, the Indonesian text prevails | Article 57(1) and (2) |
Breaches of the RPTKA and compensation obligations may attract administrative sanctions (Article 190(1)), while breaches of the counterpart, training, and repatriation obligations carry criminal sanctions (Article 187(1)). More detailed rules are set out in Government Regulation No. 34 of 2021 on the Utilisation of Foreign Workers.
What we do
Review expatriate employment compliance. We check positions, documents, employment contracts, and the employer's obligations, then map the gaps to close before they become findings.
Draft and review expatriate employment contracts. We prepare bilingual texts from the outset, taking into account that the Indonesian text prevails if the versions differ.
Advise on early termination and restructuring. This includes ending a foreign worker's contract before its term, and the impact of restructuring, PKPU, or bankruptcy on foreign and local employees.
Handle disputes with employees, partners, or other parties arising from your business activities in Indonesia.
Permit processing. For work and stay permits, we can coordinate with licensed service providers while we make sure the legal requirements are met.
Why Sagara
We look at foreign business matters from the angle where losses usually arise: receivables that go unpaid, contracts that cannot be enforced, and obligations discovered only after a problem appears. Our team's background in litigation and insolvency helps us assess those risks early.
Every engagement runs in three layers: identification of obligations and weak points; assessment of the legal exposure; and management, closing the gaps and resolving issues through to completion.
Frequently asked questions
Can an employment contract with a foreign worker be in English only?
No. A fixed-term employment contract must be in Indonesian. A bilingual text is allowed, but if the versions differ, the Indonesian text prevails (Article 57(1) and (2)).
Do foreign directors or commissioners also need an RPTKA?
The RPTKA requirement does not apply to directors or commissioners holding a certain level of shares, or to shareholders, in accordance with the applicable regulations (Article 42(3)(a)). Whether it applies should be checked case by case.
What happens if a foreign worker's contract is ended early?
A party that ends a fixed-term employment relationship before the agreed term, other than on grounds provided by law, must pay the other party compensation equal to the worker's wages for the remainder of the term (Article 62 of Law No. 13 of 2003).
Does Sagara process work and stay permits?
Our focus is the legal side. For permit processing, we can coordinate with licensed service providers so that the process stays aligned with your company's legal obligations.
Legal issues are cheapest to handle before they become disputes. We accept consultations by appointment, in English or Indonesian.