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Working in Indonesia
Find out how to get a job and work in Indonesia
Are you thinking of packing up your bags in order to start working in Indonesia? It’s always easier to move abroad with a job lined up. So if this is your dream, read on for tips on the economy, job opportunities and social security so that you can successfully embark on your next adventure in Indonesia!
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Employment in Indonesia
- Indonesia’s economy is quite mixed and the service sector is one of the biggest; many expats find jobs as English teachers or in tourism.
- Business etiquette is different from Western countries and you should be aware of it.
- Indonesia’s taxation system is rather complicated and it is advisable to contact your local chamber of commerce for more information, also in regard to tax treaties.
Working in Indonesia probably does not evoke images of tall skyscrapers filled with offices and busy people dressed in business attire. Instead, an image of white sandy beaches, lush green rolling hills, rice paddies, and artistic temples may come to mind. However, do not despair, as finding a job in Indonesia might be challenging, but not impossible.
For its population size of over 259 million, there is only a 6.6% rate of unemployment, which speaks for itself. Despite the rather hard-hitting Asian financial crisis of 1997, Indonesia’s economy recovered rather quickly and is still showing significant economic growth. This is a welcoming indicator for those planning on or already working in Indonesia.
First Impressions of Indonesia’s Economy
The Indonesian economy relies heavily on domestic consumption, and this sphere has seen increasing investment by local and foreign investors. Generally speaking, however, the economy is very mixed, with both the private sector and the government play a large role. The Indonesian government has implemented a long-term development plan for the future in order to stabilize economic growth. Its main goals are to reduce poverty, promote the quality of human resources, improve science and technology, and strengthen economic competitiveness.
With a gross domestic product of nearly 1.3 trillion USD, Indonesia is a member of the G-20 major economies. Jakarta is Indonesia’s largest export center in part due to its many ports and its proximity to Asia and Australia. In fact, the Port of Jakarta is not only Indonesia’s largest seaport, but one of the largest ports in the entire Java Sea basin.
Indonesia and the Growing Service Sector
Indonesia’s main industries are petroleum and gas, textiles and apparel, footwear, mining, cement, chemical fertilizers, plywood, rubber, food, and, of course, tourism. Originally with a much larger labor force employed in the agricultural sector, in recent years, Indonesia has moved towards the services sector (now around 45% of the Indonesian work force).
The agricultural sector still remains strong, however, with almost 41% of those working in Indonesia employed in agribusiness or subsistence farming. The remainder of jobs are in the industrial sector.
Your Job Opportunities in Indonesia
Most expats in Indonesia are employed by foreign companies, teach English, or work in the export sector. As getting a working visa is not the easiest step in the moving process, foreign companies are an expat’s best bet for being able to work in Indonesia. See our Moving to Indonesia article for more information on Indonesian work visas.
If you are thinking of working in Indonesia and don’t know where to begin your search, Jakarta is not a bad place to start. The capital is not only the financial hub of Indonesia, but it is also home to many important industries. Job opportunities abound in the electronics, automotive, chemical, and biomedical as well as mechanical engineering sectors.
Younger expats in particular tend to find jobs working in Indonesia as English teachers. There are quite a few jobs for expatriates who are certified either in English as a Second Language (ESL) or in Teaching English as a Foreign Language (TEFL).
There are some reputable job sites for Indonesia, such as the recruitment agencies Jobs DB, Job Street, or Workster, which are geared specifically towards expats. They can be useful in finding work before you go to Indonesia.
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Doing Business in Indonesia
The Dos and Don’ts of Doing Business in Indonesia
Business is business in every country. However, successful business partnerships can often be directly linked to one’s adherence to the cultural etiquette. Indonesia is a mainly Muslim country, therefore, it would be wise to get acquainted with the major Muslim holidays and practices. For example, bringing alcohol as a gift to a practicing and devout Muslim is inappropriate, as consuming alcohol is forbidden in Islam.
Below you will find a few helpful hints for dos and don’ts concerning proper business etiquette in Indonesia:
- Business relationships are based on trust in Indonesia. It is important to make personal contact with potential partners when doing business here.
- Handshakes are customary when meeting someone for the first time. Contrary to many Western societies, where a firm handshake is a sign of a strong character, most Indonesians apply only very light pressure when shaking hands. Women’s hands may be shaken as well if they initiate. When meeting several people in a group, it is customary to shake the eldest person’s hand first.
- Negotiations can be lengthier than you may be used to in your country of origin. Multiple meetings may be necessary in order to come to a final decision or agreement. Refrain from hurrying your Indonesian business partners along, as this may cause offense.
- Make sure to have your business cards printed in both English and Bahasa Indonesian (or Chinese, depending on whether or not you will be working with Chinese Indonesians).
- Keep in mind that religious Muslims pray five times a day. If you conduct business with Indonesian Muslims, you should not schedule any meetings or lunch dates during these times. Prayer times are listed on the Islamic Finder as well as at the local mosques.
- Avoid using red ink when writing a person’s name. It is considered impolite, as red was originally used to record the names of the deceased.
The Knotty Indonesian Taxation System
Since 1984, every person working in Indonesia is required to have a tax file number, called Nomor Pokok Wajib Pajak (short NPWP). The procedure to apply for a tax number can be found on the Indonesian Directorate General of Taxes website. Resident tax payers are subject to taxes based on worldwide income, while non-residents are taxed only on their Indonesian income. You count as a resident for fiscal purposes if you reside for more than 183 days per year in Indonesia.
Since the Indonesian tax system is complicated — but the individual tax payer is held responsible for properly registering with the local tax service office and correctly paying their taxes — we recommend asking a reliable and competent tax advisor for help. For instance, you could contact your home country’s chamber of commerce in Indonesia and ask them if they know of any resident tax accountants.
They will inform you about how to check if your employer pays the right amount of salary withholding tax, what counts as income (e.g. benefits in kind do not!), and how to minimize your taxes. For example, if your employer agrees to cover housing costs or school fees, the company should pay this money directly to the landlord or international school. If they transfer the money to you instead, you might have to pay taxes on it — which is easily avoidable.
Indonesia has double taxation treaties with 65 countries, among them Australia, Canada, China, Germany, India, New Zealand, Singapore, the United Kingdom, and the USA. Be sure to check with your future employer in Indonesia, or the local tax office in your home city, to find out whether or not your country of origin has such an agreement with Indonesia.
The Reform of the Social Security System
Until recently, solely companies with more than ten employees were required to pay social security benefits for their workers. In 2015, however, the workers’ social security agency (BPJS) was launched, with the aim of extending social security to all workers. The plan includes a pension scheme, death benefits, old age benefits, and workplace injury benefits. Nevertheless, since this reform is quite recent, there are many challenges to it, and it is often unclear how contributions are calculated. It should be noted that there are two separate BPJS in Indonesia; one takes care of the healthcare, whereas the other manages social security.
Additionally, the medical benefits that you are offered under the company healthcare policy may be limited. Therefore, it would be wise to carefully check what exactly your employer’s insurance offer will cover. You may need to take out additional insurance or go for a private international insurance plan instead.
Last but not least, working in Indonesia may affect your entitlement to the national pension scheme back home. Talk to your local social security administration and your bank about your retirement provisions.
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