Foreign Construction Company Representative Office (BUJKA) in Indonesia

Foreign investors aiming to expand their construction business to Indonesia have two options – set up a limited liability company (PT PMA) or a representative office for their foreign construction company (BUJKA). This article will clarify the process of setting up a representative office for a foreign construction company in Indonesia. Table of contents What […]

Foreign investors aiming to expand their construction business to Indonesia have two options – set up a limited liability company (PT PMA) or a representative office for their foreign construction company (BUJKA).

This article will clarify the process of setting up a representative office for a foreign construction company in Indonesia.

Table of contents

    What is a BUJKA?

    Badan Usaha Jasa Konstruksi Asing or BUJKA is a type of a representative office that foreign construction firms can establish in Indonesia. Therefore, one of the prerequisites of setting up a BUJKA is to have an existing construction company outside of Indonesia.

    A BUJKA is best suitable for larger foreign construction companies since they are only allowed to engage in large-scale construction projects while small size projects are reserved for local construction companies.

    Representative offices are not equal to limited liability companies. However, many foreign companies opt for a BUJKA instead of setting up a limited liability construction company (PT PMA) in Indonesia. Mainly because it does not require any local shareholders.

    Once a BUJKA is set up, it can participate in tenders and collect information about construction projects all over Indonesia. Even though you don’t need to have local shareholders when setting up a BUJKA, you are required to have a local construction company as your partner by the time the project is being delivered.

    Differences between a BUJKA and a PT PMA

    BUJKA

    PT PMA

    Type of legal entity

    Representative office

    Limited liability company

    Maximum allowed foreign ownership for construction companies

    100% foreign-owned

    67% for non-ASEAN,

    70% for ASEAN investors

    Local involvement

    Joint operation with a local construction company is required when the project is being delivered

    Local shareholder is required (either silent or active) to be a National Construction Service company with a minimum classification of B1.

    Emerhub can assist with finding such shareholder

    Minimum capital requirement

    No minimum capital requirement

    IDR 50 billion (~USD 3.7 million) net equity for PT PMA in construction service with B2 classification

    (find more information about minimum capital in Indonesia here)

    Allowed activities

    • Contact companies and institutions and also collect information about available construction projects in Indonesia
    • Participate in tenders, hire employees (local and foreign)
    • Apply for a limited stay permit for its foreign executives
    • Open a bank account
    • Work on construction projects together with a local construction company without acquiring a construction license
    • Can be involved in construction projects with a value of more than IDR 50 billion (~USD 3,7 mln)
    • Deliver construction projects in Indonesia without cooperating with any local companies

    Estimated time of establishment

    2 months

    4 months

    Have a look at our previous article for more detailed information about setting up a construction company in Indonesia.

    Requirements for a BUJKA in Indonesia

    Despite having fewer requirements than limited liability companies, BUJKAs still have some preconditions they need to comply with, as per Regulation No. 5 of 2011 of Minister of Public Works:

    • Have joint operation with a 100% Indonesian-owned construction company when delivering projects
    • Classified as ‘large-scale’
    • Only involved in complex, high-risk, and/or highly technical construction projects

    Joint operation with a local construction company

    Note that one of the main prerequisites of delivering construction projects in Indonesia is that a BUJKA must have a local construction company as their partner. In other words, they can carry out construction projects only through joint operations with a local PT.

    However, BUJKAs are allowed to participate in biddings already before they have a local partner for that project. Furthermore, BUJKAs can have separate partners for different projects whereas construction PT PMAs can only have one as they are considered a joint venture.

    Both BUJKA and its local partner will have the same liability regarding the construction.

    How to set up a construction company representative office in Indonesia

    The process of setting up a representative office for your construction company in Indonesia is divided into three main stages:

    BUJKA

    #1 Obtain preliminary licenses

    In order to be able to start with the BUJKA registration process, you must first get a preliminary permit which consists of 3 sub-licenses:

    Preliminary permit

    Details

    Membership of Indonesian Contractors Association

    (Kartu Tanda Anggota/KTA)

    Proof of being an officially approved entity, issued by an association in relations to the applied classification

    Certificate of Expertise

    (Sertifikat Keahlian /SKA)

    BUJKA applicant should provide either a local or foreign expertise as per classification applied and proceed the certification

    Emerhub can provide as per classification of works registered for the BUJKA

    Certificate of Business in Constructions

    (Sertifikat Badan Usah/SBU)

    Confirmation of your classification and subclassification

    The total processing time of preliminary licenses can be up to 3 months. With Emerhub, however, it will take up to 3 weeks.

    #2 Set up a BUJKA

    After you have obtained all the required initial licenses you can proceed with registering your BUJKA:

    1. Pay the government a fee of US$ 10,000 for construction service companies or US$ 5,000 for construction consulting companies
    2. Obtain BUJKA license from the BKPM (Investment Coordinating Board)
    3. Get a Domicile Letter from the local subdistrict
    4. Tax Registration
    5. Business Registry (TDP)

    The total time of setting up a BUJKA is up to 1 month. Also, note that a BUJKA license is valid for three years and can be extended after that.

    #3 Acquire work and stay permit KITAS

    The last step of BUJKA registration is acquiring a limited stay permit (KITAS) for a foreign Chief Representative Officer. The process of obtaining work and stay permits in Indonesia roughly takes 1 month.

    However, there is a new regulation coming which requires the CRO of a BUJKA to be an Indonesian citizen. If you do not have such person, Emerhub can also provide a nominee Chief Representative Officer.

    Where to start?

    If you are not sure whether to enter Indonesia by setting up a representative office for your construction company or choose a limited liability construction company instead, book a consultation by filling in the form below.

    We will discuss the details of your future construction business in Indonesia and assist you in finding the best solution for your business.

    Let's grow your business in Indonesia

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    I think the best part is I feel Emerhub is confident when it comes to regulations and very updated compare to some of the others. A sense of security when we were actually investing our money doing the right things. So coming from a bad experience before Emerhub and having to change all our documents because of the mistake having been made earlier. We have confidence that with Emerhub we are doing the right thing.

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