Foreign Construction Companies in Indonesia: A 2026 Guide

Are you planning to take on construction work in Indonesia? Before anything else, you need to establish how much of the local company you are allowed to own, because construction is one of the sectors where Indonesia still applies a foreign ownership limit.

Foreign investors can hold up to 67% of an Indonesian construction company, or up to 70% if they are investing from an ASEAN country. The remaining shares must be held by an Indonesian construction company that meets its own qualification requirements.

Indonesian Construction Sector in Numbers

Construction is the fourth-largest sector in the Indonesian economy and a structural growth driver. The numbers below frame the scale of the opportunity foreign contractors are looking at.

Beyond IKN, the wider construction pipeline runs across toll-road extensions on Sumatra and Sulawesi, the 35GW power-generation programme that the JETP commitments are expanding, port and airport upgrades, and Bali's industrial-tourism expansion.

The IMARC Group projects the Indonesian construction market will grow at roughly a 7% compound annual rate through 2033.

Foreign Ownership Rules for Construction Companies in Indonesia

Government Regulation 28/2025 replaced GR 5/2021 as the framework for risk-based business licensing in Indonesia. It reorganized much of the licensing system, but it did not change the ownership limits that apply to construction.

The limits appear in Article 435 and the annex of GR 28/2025 itself. The Directorate General of Construction Development then restated them in Circular Letter 37/KPTS/DK/2025, which sets the certification standards for construction business entities.

In both instruments, the position is the same: 67% for investors from outside ASEAN, and 70% for investors from ASEAN member states.

Additionally, a further regulation now governs how these requirements are applied in practice. Minister of Public Works Regulation 6 of 2025 came into force on 30 December 2025, replacing the 2021 version of the same regulation. It sets out the ownership and investment criteria, the financial thresholds your company must meet, the size of projects you are permitted to take on, and the sanctions that apply if you fall short of any of them.

It is also worth noting that the ministry itself was reorganized in October 2024, when the Ministry of Public Works and Public Housing was split. Construction services now sit with the Ministry of Public Works.

Which construction work is open to foreign investment

The ownership limits are not the only restriction. Your business classification also has to be open to foreign investment in the first place, and a significant share of construction work in Indonesia is not.

Under Presidential Regulation 10/2021, as amended by Presidential Regulation 49/2021, much of ordinary building construction is allocated to Indonesian cooperatives and micro, small, and medium enterprises. The allocation covers building work that uses simple and intermediate technology. This is why residential and accommodation buildings sit on the reserved side while technically demanding work does not.

Civil engineering, infrastructure, and specialist installation are substantially more open.

Classifications available to foreign contractors include:

• Civil infrastructure: bridges, flyovers, and underpasses (42102), railways (42103), tunnels (42104), dredging (42914), coastal protection works (42922), and prefabricated civil structures (42930)
• Energy, mining, and resources: oil and gas facilities (42915), mining facilities (42916), geothermal facilities (42917), hydroelectric reservoirs (42921), and chemical and petrochemical facilities (42923)
• Specialist facilities: sports facilities (42918), military and satellite facilities (42924), and other special civil works (42929)
• Technical installation: telecommunications (43212), navigation systems for sea, river, and air (43214), heating and geothermal systems (43222), meteorological and geophysical installations (43292), ionizing radiation facilities (43293), nuclear installations (43294), and flooring, wall, sanitary, and ceiling works (43302)

This is not an exhaustive list and is subject to change. Therefore, it is strongly recommended to review the classifications before deciding on your legal structure and moving forward. You can also discuss your plans with our local experts by filling out the form below. 

Three Ways for Foreign Contractors to Enter the Market

Option 1: BUJK PMA (foreign investment construction company)

A BUJK PMA is an Indonesian limited liability company with foreign shareholders. It is the most complete option available to a foreign contractor, because it allows you to bid for projects, sign contracts, and carry out work in your own name.

This structure suits contractors who intend to build a pipeline of work in Indonesia rather than deliver a single project. However, it carries the ownership limits described above (67% for investors from outside ASEAN, and 70% for investors from ASEAN member states), along with partner, financial, and project size requirements that are covered in the next section.

Your Indonesian shareholder cannot be an ordinary local investor. The remaining 33%, or 30% for ASEAN investors, has to be held by an Indonesian construction company with a large (Besar) qualification of its own.

Option 2: BUJKA (foreign construction representative office)

A BUJKA is a representative office of a construction company that is incorporated abroad. It allows you to operate in Indonesia without establishing a local company, which makes it a practical option for contractors entering the market for one large project.

There are several conditions such as:

• A BUJKA must hold a large (Besar) qualification, and it can only carry out projects through a joint operation with a large Indonesian contractor
• The projects themselves must be high risk, require advanced technology, or carry a high contract value
• The head of the representative office must be an Indonesian citizen serving as technical manager, unless a foreign appointment is justified by genuine technology transfer.

A BUJKA does not have a paid-up capital requirement, although it must demonstrate financial capability appropriate to the work it intends to take on.

Option 3: KSO (joint operation)

A joint operation, known locally as a kerja sama operasi or KSO, pairs your company with an Indonesian contractor for a specific project. In this case, neither party establishes a new company. Instead, the agreement between them sets out the scope of work, the allocation of responsibility, and how revenue is shared.

Your Indonesian partner will typically hold the SBU classifications that the project requires, while you contribute technical capability and capital. Many government tenders require this arrangement in any case, so it is often less a choice than a condition of bidding.

Requirements for Establishing a BUJK PMA

Under MoPW Reg 6/2025, a BUJK PMA must satisfy three sets of requirements before it can be certified. Each of these has caused problems for foreign contractors who planned their entry around the general rules for foreign investment companies.

1. Your Indonesian partner must be a qualified contractor

The Indonesian shareholder cannot simply be a local investor willing to hold the minority 33% or 30% stake. The regulation requires that partner to be a registered construction business entity holding a large qualification, evidenced by a valid construction business license and SBU, in the same business classification as you.

Your own parent company must meet an equivalent test in its home country. It must be registered as a construction business entity in the form of a legal entity, hold a large qualification there, and operate in the same business classification as your Indonesian partner.

Because both sides of the joint venture are assessed, the choice of partner determines whether the company can be certified at all. For that reason, it is worth identifying and verifying the partner before any incorporation work begins.

2. Your company must meet the financial thresholds

Every BUJK PMA is classified as a construction business entity with a large qualification. That classification carries a minimum annual sales requirement of IDR 50 billion and a minimum financial capability of IDR 10 billion.

A newly established company has no sales history of its own. In that situation, the annual sales requirement is assessed on the basis of the Indonesian partner's experience, which is a further reason to settle the partner arrangement early.

3. Your projects must meet the minimum value

MoPW Reg 6/2025 introduced business segmentation based on qualification, which sets a minimum project value for each class of contractor. As a large-qualification entity, a BUJK PMA may only carry out construction work with a minimum value of IDR 50 billion, or approximately USD 3 million.

This requirement is often overlooked during planning. If your intended work in Indonesia consists of smaller contracts, a BUJK PMA will not accommodate it, and you should look at the BUJKA or KSO routes instead.

Renewal is also worth planning for at the outset. To extend your SBU, you must demonstrate relevant construction experience across two SBU validity periods. A company that holds the certificate without winning work during that time will not be eligible to renew it.

The Construction Business Certificate (SBU)

The SBU is the certificate that establishes which construction work your company is qualified to carry out. Every construction business entity operating in Indonesia must have this. Also, it is a prerequisite for bidding on both public and private projects.

Each certificate records two things about your company. The first is your classification, meaning the type of construction work you are certified for. The second is your qualification, meaning the scale of project you can take on, which runs from small (K1 and K2) through medium (M1 and M2) to large (B1 and B2).

As a foreign contractor, you only need to consider the large qualification, since both a BUJK PMA and a BUJKA are required to hold it. Integrated construction services, which combine design and build in one contract, are available only at that level as well.

Furthermore, certificates are valid for three years and are tied to specific business classifications, so a contractor working across architectural, civil, and mechanical and electrical scopes will need classifications that cover each of them.

The certification process itself involves several bodies, and it is useful to understand which does what. Your SBU is issued by an accredited certification body known as an LSBU. The LPJK then registers and numbers the certificate, after which it appears in the OSS system as a verified Standard Certificate.

Please note that until the OSS status shows as verified, the certificate is not usable for tendering.

Certification also depends on your workforce. Your company must employ workers holding valid SKK competency certificates in the roles and numbers that your qualification level requires.

Applications are frequently delayed at this stage, because companies apply for the SBU before the personnel documentation has been assembled. Therefore, it is more efficient to secure the SKK certificates first and then apply.

Workforce and Safety Requirements

For your team to legally work on Indonesian construction sites, you need to have three certifications:

• SKK Konstruksi: It certifies the competency of individual workers for specific roles, such as site engineer or project manager. Levels run from 1 to 9, with level 9 corresponding to the large qualification tier.
• K3 certificates: These are eligibility certificates for equipment and working conditions, covering areas such as work at height, boilers, pressure vessels, lifts, and lifting equipment. The Ministry of Manpower issues these, and each item of regulated equipment requires its own certificate.
• SMK3: This is a company-level safety management system certification. It becomes mandatory once a company employs 100 or more workers or operates in high-risk activities, and audits are conducted on a three-year cycle. Contractors often cross the headcount threshold partway through a project, so it is better to plan the implementation against your hiring schedule than to wait until the requirement applies.

In addition to these certifications, foreign personnel working on your sites will also need immigration and manpower documentation. This consists of an approved RPTKA, the DKPTKA payment notification, and a work KITAS.

Bidding on Government and IKN Projects

Foreign contractors are permitted to bid on Indonesian government projects, including work at IKN Nusantara, subject to conditions.

The project must meet at least one of three criteria. It must be high risk, require advanced technology, or carry a high contract value. Projects involving specialized engineering or technology transfer are more likely to qualify.

Government-funded projects also carry local content requirements. Domestic Component Level (TKDN) thresholds are typically met by sourcing materials locally, employing Indonesian site staff, and engaging local subcontractors.

Our TKDN framework guide explains how the calculation works in practice.

Finally, many IKN and infrastructure tenders require a joint operation with an Indonesian construction entity that holds the relevant SBU classifications. In these arrangements, the foreign party provides specialist capability while the Indonesian party manages the site and the relationship with local authorities.

Sanctions for Non-Compliance

MoPW Reg 6/2025 sets out the violations that can result in sanctions for a BUJK PMA. These violations include:

• providing construction services without the required SBU
• providing services without the necessary business license
• failing to meet reporting obligations
• failing to comply with the foreign ownership requirements or the technical investment criteria.

The sanctions that may be imposed range from written warnings and administrative fines through to suspension and, ultimately, revocation of your license.

Since a revoked license removes your ability to bid for work, compliance with the ownership and partner requirements is worth verifying periodically rather than only at the point of setup.

Common Mistakes Foreign Contractors Make

Assuming full foreign ownership is available:

Construction remains subject to the 67% and 70% limits, and an investment structured on the assumption of full ownership will not pass certification. Confirm the ownership position that applies to your specific business classification before you agree a shareholding arrangement.

Confusing a BUJKA with a BUJK PMA

A BUJKA is a representative office of a foreign parent company, while a BUJK PMA is an Indonesian company with foreign shareholders. The capital, tax, and licensing requirements differ substantially, so the structure should be settled before any other work begins.

Applying for the SBU before the workforce is in place

Certification depends on your company already employing SKK-certified personnel in the required roles. Applications submitted before that documentation exists will stall.

Selecting a business classification that is closed to foreign investment

Much of ordinary building construction, including residential and accommodation buildings, is allocated to Indonesian cooperatives and MSMEs under Perpres 10/2021 as amended by Perpres 49/2021. Civil infrastructure and specialist installation work is far more open.

It is advisable to check your intended classifications against KBLI 2025 before you plan anything else, because the OSS system will reject your NIB application if you select a reserved code

Treating certificate renewals as an administrative afterthought

The SBU is valid for three years, SMK3 is audited on a three-year cycle, and K3 equipment certificates follow their own schedules. Renewal of the SBU additionally depends on demonstrated construction experience, so the renewal calendar needs an owner within your organization from the beginning.

Setting Up Your Indonesian Construction Operations with Emerhub

Establishing a construction operation in Indonesia involves several workstreams that run in sequence, and Emerhub manages them on your behalf.

We begin with the structure, since it determines everything that follows. That includes verifying that your Indonesian partner meets the ownership requirements and holds a large qualification with a valid SBU in your business classification. Once the shareholding is settled, we handle the incorporation of the PT PMA or the registration of the BUJKA.

If you are preparing to bid for a project, the time to review your structure is before the tender documents ask for your SBU number. Talk to our Jakarta team about the work you are planning, and we will set out the structure, the requirements that apply to it, and a realistic timeline to your first signed contract.