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Overview of Indonesia

Indonesia is a country in South-east Asia that is made up of more than 18.000 of islands. The population is made up of many different ethnic groups, that speak different languages. It has a population of 267.7 million people. It is also home to one of the youngest populations on Earth. The capital – Jakarta – is situated on the main island Java and houses over 11 million people. The official language is Indonesian. The Komodo dragon is native to Indonesia and is the largest lizard in the world, growing up to 3m.

Indonesia is slowly throwing away the title of a developing nation and is joining China and India as one of the fastest growing economies. The culture in Indonesia, along with the majority of Asia, is to be polite, gentle and keep face, thus avoiding embarrassing situations. Hence, Indonesians tend to communicate indirectly and tend to avoid saying no. At the first business meeting, it will be all about getting to know one another. Indonesians do not believe in rushing something so one has to be patient.

Currency of Indonesia

  • Indonesian rupiah

Health Insurance and the Social Security system of Indonesia

Indonesia offers universal public healthcare for the population. This was implemented in 2014 and now covers most of the Indonesian population. The formally employed pay a premium of 5% of their salary, 4% by the employee and 1% by the employer. Expats are not covered under this system. Many expats and wealthy Indonesians go to Singapore to access higher quality healthcare

Employer cost of Indonesia

The cost for an employer to hire someone in Indonesia is a plus of 5.74% to the gross salary.

Salary and bonuses of Indonesia

Employees can be paid weekly, bi-weekly or monthly. They have to be paid at least once a month.

A 13th monthly payment – known as Tunjangan Hari Raya (THR) – is paid before the longest religious holiday.

Commissions, incentives, and bonuses are variable and will be agreed upon directly with the employer.

Public Holidays in Indonesia

  • January 1st – New Years Day
  • moveable (January/February) – Chinese New Year
  • moveable (March/April) – Day of Silence
  • moveable (March/April) – Good Friday
  • May 1st – Labour Day
  • Moveable (May/June) – Ascension Day
  • moveable (May/June) – Buddha’s birthday
  • June 1st – Pancasila Day
  • August 17th – Independence Day
  • December 25th – Christmas
  • Islamic New Year
  • Birthday of the Prophet
  • Ascension of the Prophet
  • Eid al- Fitr
  • Eid Al-Adha

Working Hours in Indonesia

Office hours are from 8:00am to 4:00pm, Monday to Friday.

A regular work week is 40 hours.

An employee cannot be forced to work overtime against his will. The employee has to agree to work overtime. The maximum is 3 hours per day and 14 hours per week. For the first hour, overtime is paid at 150% of the regular hourly wage. Any further hour is paid at 200% of the regular hourly wage.

Vacation in Indonesia

In Indonesia, an employee is entitled to a minimum of 12 days annual leave after he/she has worked for the employer for 12 months.

Sick Leave in Indonesia

When an employee falls sick in Indonesia, a medical certificate is required. Full wages will be paid in the first 4 months of the sickness. In the second 4 months, 75% of the wages will be paid. In the third 4 months, 50% of the wages will be paid and after that, 25% of the wages will be paid until the employer terminates the employee.

Termination/Severance in Indonesia

In Indonesia, one can terminate an employee without without cause. Without cause is due to company restructure, a merger or bankruptcy. With cause is due to gross misconduct, if the employee has been absent for over 5 days with no reason etc.

A 30 day notice must be given when terminating an employment contract.

Severance payment is calculated as follows:

  • less than 1 year service – 1 months wage

  • 1 year but less than 2 years – 2 months wage

  • 2 years but less than 3 years – 3 months wage

  • 3 years but less than 4 years – 4 months wage

  • 4 years but less than 5 years – 5 months wage

  • 5 years but less than 6 years – 6 months wage

  • 6 years but less than 7 years – 7 months wage

  • 7 years but less than 8 years – 8 months wage

  • more than 8 years – 9 months wage