Asia-Pacific · IDR

Hire in Indonesia

Republic of Indonesia — 278 million population, $4,790 GDP per capita. Everything you need to know about employment law, tax, compliance and hiring in Indonesia.

Capital

Jakarta (moving to Nusantara)

Currency

Indonesian Rupiah (IDR)

Languages

Indonesian (Bahasa Indonesia)

Time zones

UTC+7 (WIB), UTC+8 (WITA), UTC+9 (WIT)

Hiring overview

Typical time to hire
2-3 weeks for contractor, 3-6 weeks for full-time
Entity requirement
Indonesian PT (Perseroan Terbatas). Registration at OSS (Online Single Submission). Minimum capital requirements apply.
EOR available
Yes — from $399/employee/month through a Corpshore entity
Contractor of record
Yes — from $39/worker/month

Employment law

Standard workweek
40 hours (7 hours/day 6 days or 8 hours/day 5 days)
Maximum weekly hours
40 hours
Minimum annual leave
12 working days after 12 months
Public holidays
17 per year
Maternity leave
3 months (1.5 before + 1.5 after), fully paid
Paternity leave
2 days
Notice period
14-30 days depending on contract
Severance
Complex formula under Omnibus Law (2020): severance (1-9 months based on tenure) + long-service pay (2-10 months) + compensation rights. Religious holiday allowance (THR): 1 month salary.
Probation
3 months (indefinite contracts only; not permitted for fixed-term)
Overtime rules
1.5x (first hour), 2x (subsequent). Maximum 4 overtime hours/day, 18 hours/week.

Tax overview

Income tax range
5% to 35%
Corporate tax
22%
Social contributions
BPJS Employment: employer ~10%, employee ~3%. BPJS Health: employer ~4%, employee ~1%.
VAT / GST
11% (increased from 10% in April 2022; scheduled for 12% in 2025)
Tax year
Calendar year
Treaty network
Over 70 tax treaties

Compliance landscape

Worker classification
Omnibus Law on Job Creation (2020, amended 2023) significantly reformed employment law. PKWT (fixed-term) vs. PKWTT (indefinite) contracts. Outsourcing permitted for supporting activities.
Data protection
Personal Data Protection Law (UU PDP, 2022). Implementation period through 2024. Ministry of Communication and Information oversees.
Right to work
ITAS (foreign worker utilisation plan) approval + KITAS (temporary stay permit) required. Employer must have a plan to replace foreign worker with Indonesian.
Non-compete
Limited statutory basis. Generally considered unenforceable as restraint of freedom to work under Indonesian law.
Collective bargaining
Protected under the Manpower Law. Multiple unions per company permitted. Bipartite cooperation institution required for 50+ employees.

Payment rails

Bank transfer (BI-RTGS/SKNBI)
Mobile wallets (GoPay, OVO, Dana, ShopeePay)

BI-RTGS for large-value transfers. SKNBI for retail. Digital wallets (GoPay, OVO) are widely used. QRIS (QR Indonesian Standard) unifies QR payments.

Key considerations for hiring

  • THR (Tunjangan Hari Raya, religious holiday allowance) of 1 month salary is mandatory before major religious holidays
  • Omnibus Law (2020/2023) significantly reformed employment, reducing severance and increasing flexibility
  • Indonesia is Southeast Asia's largest economy and digital market (300M+ mobile internet users)
  • Jakarta's tech scene (GoTo, Tokopedia, Bukalapak, Traveloka) is ASEAN's largest startup ecosystem

Business and cultural context: Indonesia

Business culture

Relationship-driven, hierarchical, and harmony-oriented. Javanese cultural values (halus: refined, smooth) influence business interactions. Religious diversity (Muslim majority but significant Christian, Hindu, Buddhist populations) shapes calendar and customs.

Key industries

Digital economy (GoTo, Tokopedia)
Mining (nickel, coal, palm oil)
Manufacturing
Tourism
Financial services

Talent pool strengths

Software engineering
Digital marketing
Manufacturing
Mining engineering
E-commerce operations

Historical context

Indonesia's digital economy is Southeast Asia's largest, projected to reach $130B by 2025 (Google-Temasek-Bain report). The country's tech ecosystem produced GoTo (merger of Gojek and Tokopedia) and multiple unicorns. With 278 million people across 17,000 islands, Indonesia's archipelagic geography drove mobile-first digital adoption that leapfrogged traditional infrastructure.

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Hire in Indonesia — employment law, tax, compliance | Corpshore Work