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Developing a successful recruitment strategy in Indonesia

Developing a successful recruitment strategy in Indonesia

Expanding your business to Indonesia presents a significant opportunity. However, to ensure success, you must establish an effective recruitment system, particularly for Foreign-owned company (PT PMA) ventures. PMA ventures typically require a customized approach to hiring local talent in Indonesia.

Recruitment stages in Indonesia

Why do you need strategic recruitment in Indonesia?

PT PMAs can manage their recruitment internally or delegate tasks to external specialists. Regardless of the chosen approach, the recruitment process generally follows these stages:

1. Job vacancy advertisement

Promote job openings through various media, including reputable platforms and your company’s website, to increase candidate awareness.

2. Requirements review

Clearly define role-specific criteria before publishing job ads to streamline the shortlisting process when handling incoming applications.

3. Selection process

Utilize written and/or oral tests to assess shortlisted candidates. Though resource-intensive, this phase is crucial for identifying the most suitable candidates.

4. Recommendations to end-user

After rigorous selection processes, present the top candidates to the end-user (company or department) for the final selection.

Due to the recruitment process’s complexity, many companies outsource this responsibility to a third-party company with a good reputation. This ensures efficiency and expertise in managing the multifaceted aspects of hiring the right talent for the organization.

Read more: How recruitment agency can transform hiring in the manufacturing industry

Labor law and employment regulations in Indonesia

The laws and regulations related to the nation’s growth are subject to frequent changes in Indonesia. This situation makes it more complicated for foreign investors to understand the recruitment process in Indonesia.

Hence, hiring an experienced recruitment consultant who can help you navigate the complexities of doing business in Indonesia is recommended.

A recruitment consultant equipped with updates on regulations to provide the right solution for managing labor in Indonesia. Currently, the primary legislation governing labor and employment are:

Regulations Descriptions
Manpower Law (Law No. 13 of 2003) The Manpower Law, represented by Law No. 13 of 2003, comprehensively covers various labor-related aspects. 

It plays a pivotal role in regulating employment contracts, industrial relations, government functions, termination of labor relations, trade unions, and wages.

Job Creation Law (Law No. 11 of 2020) Law No. 11 of 2020, also known as the Job Creation Law, stands as an essential component within the legal framework of Indonesia. 

This law explicitly addresses matters about job creation, making it a significant piece of legislation in shaping the country’s employment landscape.

Government Regulation No. 35 of 2021 Government Regulation No. 35 of 2021 is a crucial legal instrument focusing on critical employment aspects. 

This regulation concerns fixed-term employment, outsourcing, working hours, rest times, and employment termination. 

It serves as a crucial supplement to the broader legal landscape, providing detailed guidelines for businesses engaging with these aspects of employment law in Indonesia.

Indonesia’s employment policy prioritizes protecting the rights of its workforce and addressing local employment concerns. While foreign professionals are welcome, work permits are mandatory, and companies are encouraged to prioritize hiring local talent.

Foreign professionals seeking employment in Indonesia can apply for a residence permit and a work visa.

Regulation No. 16, Regulation No. 35 of 2015, and Presidential Regulation No. 72 of 2014 outline the guidelines for businesses employing foreign workers.

Challenges in the Indonesian labor market

Foreign-owned companies face two significant challenges in tapping into Indonesia’s labor pool, they are:

1. Geographic disparity

One obstacle is the concentration of skilled and talented workers in major cities such as Jakarta, Surabaya, Semarang, and Bandung, leading to an uneven distribution of labor resources across the country.

2. Human development index

Indonesia’s lower Human Development Index (HDI) of 0.617 compared to global and regional standards impacts the overall quality of its workforce.

Consequently, careful selection becomes imperative to ensure the recruitment of the best candidates from the plentiful talent pool available.

How to hire the right employee

Here are some concise tips to streamline and enhance your employee hiring process:

1. Prioritize commitment

Look for candidates committed to long-term employment, as loyalty is crucial for a successful hire. Assess their work history for job-switching frequency.

2. Implement varied tests

Test candidates using diverse methods to evaluate both analytical and learning skills. Confidence is valuable, but additional assessments like an enneagram can prove their job suitability.

3. Check compatibility with company culture

Ensure candidates align with your company culture by assessing social skills and potential fit within the team they will work with regularly.

4. Continuously improve the hiring process

Regularly update your hiring process to attract top talent and ensure the selection of suitable candidates for your company.

5. Consider hiring interns

Internship programs provide insights into candidates’ potential, strengths, and weaknesses while fostering familiarity with your company’s culture.

6. Review social media profiles

Examine candidates’ social media profiles for a holistic understanding of their personality and compatibility with the job profile.

7. Evaluate questions asked

Take note of the questions candidates ask during the interview, as insightful inquiries demonstrate preparation, presence of mind, and genuine interest in the job.

8. Focus on required strengths

Identify specific strengths needed for the position beyond technical skills to ensure candidates can handle job-related stressors and challenges effectively.

9. Value practical experience

Emphasize practical experience when evaluating candidates, as it indicates their ability to adapt to the job quickly and may save time and resources on training.

Experienced candidates often have a faster learning mindset and require less adjustment period.

Find the right talent with InCorp Indonesia

Leveraging a recruitment agency in Indonesia is a wise decision for finding the perfect candidate for your company. As an exceptional recruitment agency, InCorp Indonesia delivers various services to facilitate seamless business growth for your company.

  • Local expertise: We find the perfect Indonesian candidates, considering culture, laws, and your needs.
  • Effortless hiring: We handle everything, from finding to welcoming new employees so that you can focus on your business.
  • Save money: Outsourcing is often cheaper than doing it yourself, freeing up resources for other things.
  • Personalized approach: We tailor our recruitment strategy to your unique company and goals.

Click the button below and let InCorp Indonesia be your guide to building the dream team.


Start investing in Indonesia with InCorp


    Teddy Willy

    Branch Manager – Surabaya Office at InCorp Indonesia

    With 10 years of experience in business consultancy, Teddy Willy offers expertise in financial and production auditing, sales and marketing, channels and distribution, supply chain management, and human resources for every business sector in Indonesia.

Frequently Asked Questions

    To provide you with accurate pricing information for our HR outsourcing services, we consider the complexities of your inquiries and the dynamic nature of regulations in Indonesia. As a result, the pricing for the service may vary accordingly. For detailed information, please get in touch with our consultants.

    There are a few things to consider, such as:

    • Prohibit any form of discrimination and provide equal opportunity for Indonesians and expatriates
    • Increase the competence of workers by giving or encouraging job training.
    • Follow the termination procedures (Terminating an employee in Indonesia can be long, tedious, and expensive.
    • Observe working hours, holidays, and overtime regulations
    • Give mandatory employee benefits, including social security and health insurance
    • Withhold only the right amount of income tax on behalf of the employees
    • Follow the wages and other benefits outlined by the law
    • Process work permits for foreign employees

    For employment, the company is subject to:

    • Employee income tax article 21
    • VAT on both the service invoice and the salary invoice
    • 2% recovery tax on salary invoice

    Besides the agreed-upon salary, employers typically offer other compensations such as overtime pay, paid annual leave, festive holiday leave, and insurance.

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