If you are a foreign contractor watching IKN Nusantara, Bali’s infrastructure expansion, or the JETP-backed energy buildout, the rules for entering Indonesia changed substantially in 2025. Government Regulation 28/2025 replaced GR 5/2021, removed the previous foreign-ownership ceilings on construction-services PT PMAs (the old 67% non-ASEAN / 70% ASEAN cap is gone), and opened several construction lines that were previously reserved for Indonesian micro and small enterprises. The licensing framework you find in older guides no longer applies.
The market 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.
10.43%
Share of Indonesian GDP contributed by the construction sector in Q4 2024. Source: BPS-Statistics Indonesia.
IDR 523 trillion
Total estimated IKN Nusantara development cost (around USD 35 billion) across phases through 2045. Source: OIKN / public announcements.
IDR 65.3 trillion
Private investment commitments to IKN outside the state budget as of September 2025, across 49 investors and 52 cooperation agreements. Source: OIKN.
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.
What GR 28/2025 changed
Government Regulation 28/2025 (issued mid-2025) is the current implementing regulation for risk-based business licensing under the consolidated Cipta Kerja framework (UU 6/2023, which made the original Job Creation Law permanent after the Constitutional Court ruling on UU 11/2020). GR 28/2025 replaces GR 5/2021 and rewrites several rules that mattered specifically to foreign contractors:
- Foreign-ownership ceilings on BUJK PMA removed. Under GR 5/2021, construction-services PT PMAs from non-ASEAN countries were capped at 67% foreign ownership and ASEAN at 70%. GR 28/2025 drops that distinction, opening BUJK PMAs to 100% foreign ownership in most construction service lines.
- Several MSME-reserved lines opened to large-scale and foreign capital. Construction sub-activities previously reserved for Indonesian micro and small enterprises are now accessible to PMA. The full list of opened versus reserved lines lives in the BUPM annex (Pres. Reg. 10/2021 as amended by Pres. Reg. 49/2021) and BPS KBLI 2025 documentation.
- Risk-based licensing carries through. Construction services remain classified as medium-high risk under the OSS regime, which means an NIB plus a Standard Certificate verified by the Ministry of Public Works and Public Housing (Kemen PUPR) before operations begin.
- SBU stays the gateway permit. The Construction Business Certificate (Sertifikat Badan Usaha, or SBU) is still the document that proves your entity’s qualification to bid and execute work in a given construction sub-sector. The Construction Services Development Institute (LPJKN, under PUPR) issues it.
Three ways foreign contractors enter the market
Option 1: PT PMA Konstruksi (foreign-owned construction subsidiary)
You incorporate an Indonesian PT PMA with construction-services KBLI codes (the 41xxx / 42xxx / 43xxx series, plus specialty codes where relevant), capitalise it under BKPM Reg. 5/2025, and obtain a Construction Business Certificate (SBU). The 2025 reform makes this option meaningfully more attractive: full foreign ownership is now permissible across most construction service lines, which removes the prior need to find an Indonesian co-shareholder up front.
A PT PMA Konstruksi fits contractors with multi-year pipelines in Indonesia who want full operational control, the ability to bid as a domestic entity, and an established local employer of record for site staff. The structure carries the standard PT PMA capital floor (paid-up IDR 2.5 billion per KBLI, total investment commitment IDR 10 billion per location), plus the SBU qualification fees layered on top.
Option 2: BUJKA (Foreign Construction Service Enterprise representative office)
Badan Usaha Jasa Konstruksi Asing (BUJKA) is the Indonesian framework for foreign construction companies that want to operate without incorporating a local subsidiary. A BUJKA is a representative office of a foreign-incorporated parent, registered with PUPR and required to hold an SBU at Large (Besar) qualification. Our earlier BUJKA setup guide covers the historical setup mechanics, though the 2025 framework adjusts several requirements.
BUJKA fits well for foreign contractors entering Indonesia for a specific large project rather than building a long-term local pipeline. Two practical constraints: BUJKAs can only undertake projects classified as high-risk, requiring advanced technology, or carrying a high contract value (or a combination), and they must work in joint operation with a local construction entity on most projects.
Option 3: Joint operation with an Indonesian contractor
A joint operation (kerja sama operasi, or KSO) pairs your foreign entity with an Indonesian contractor on a project-specific basis without forming a permanent joint venture. Each party retains its own legal entity. The KSO agreement defines scope, responsibility allocation, and revenue sharing for the specific project.
A KSO works for one-off contracts where neither a PT PMA nor a BUJKA setup is justified, and the structure is often mandated when a BUJKA bids on a domestic project that requires local-content participation. The Indonesian partner typically holds the SBU classes required for the project, while the foreign partner provides technical capability and capital.
SBU classes and what each unlocks
The Construction Business Certificate carries a qualification class that determines which project sizes your entity can bid on. The three qualification tiers are:
| Qualification | Who holds it | Typical project ceiling |
|---|---|---|
| Kecil (Small) | Indonesian micro and small construction entities | Small-value contracts, low complexity |
| Menengah (Medium) | Indonesian medium-scale entities, some BUJK PMA | Mid-value contracts requiring more capability |
| Besar (Large) | BUJKA representative offices, BUJK PMA, large Indonesian contractors | Large-value contracts including IKN tier-1 work |
BUJKAs must qualify as Besar. PT PMA Konstruksi entities typically apply for Menengah or Besar depending on the projects they intend to bid for and their internal capability evidence. SBU certificates are issued for a three-year validity and tied to specific construction sub-classifications (architectural, civil, MEP, integrated, and so on). A single entity can hold SBU classes across multiple sub-sectors when the underlying competencies and personnel certifications support each.
The workforce overlay: SKK, K3, and SMK3
A construction-services SBU is not enough on its own. Three overlapping workforce certifications determine whether your project teams can legally operate on Indonesian sites.
- SKK Konstruksi (Sertifikat Kompetensi Kerja). Individual-worker competency certificates that LPJKN issues for specific roles (site engineer, project manager, specialised technician). A construction company applying for an SBU needs a baseline number of SKK-holding personnel proportional to the qualification class.
- K3 (Keselamatan dan Kesehatan Kerja) eligibility certificates. Ministry of Manpower (Kemenaker) issues these for specific equipment and operating conditions: scaffolds and work at heights, steam boilers, pressure vessels, elevators, transport equipment, lightning protection. Each piece of regulated equipment carries its own certificate of eligibility for use.
- SMK3 (Sistem Manajemen Keselamatan dan Kesehatan Kerja) certification. Company-level safety management system certification. SMK3 is mandatory for construction companies with 100 or more employees or operating in high-risk activities. Audits run on a three-year cycle.
Foreign workers on Indonesian construction sites also need the standard manpower-permit stack: RPTKA (manpower utilisation plan), IMTA work permit, and a Working KITAS (E23). The Working KITAS framework is covered in detail in our Working KITAS renewal guide.
Bidding eligibility for government and IKN projects
Foreign-owned construction entities can bid on Indonesian projects, but the eligibility envelope is narrower than for domestic firms. Three rules shape what foreign contractors can win:
- High-risk, advanced-technology, or high-cost criteria. Foreign construction enterprises may only undertake projects that meet at least one of these criteria. The thresholds get reviewed periodically; current practice favours projects involving specialised engineering, technology transfer, or contract values above certain ceilings.
- Local content (TKDN) requirements. Government-funded projects carry Domestic Component Level (TKDN) thresholds. Foreign contractors typically meet these by sourcing locally, hiring Indonesian site staff, or partnering with Indonesian sub-contractors. Our TKDN framework guide covers the calculation rules.
- Joint operation for domestic public works. Many IKN and government infrastructure tenders require a KSO arrangement with an Indonesian construction entity. The foreign side provides specialty capability; the Indonesian side handles site management and local interface.
Five pitfalls foreign contractors run into
- Working from pre-2025 guidance. The old 67% / 70% foreign-ownership ceilings on BUJK PMA are no longer current. Articles, advisory memos, and even some consulting firms still quote them. Confirm any structural advice against the GR 28/2025 framework rather than older guides.
- Confusing BUJKA with BUJK PMA. BUJKA is a representative office of a foreign-incorporated parent. BUJK PMA is a separately-incorporated Indonesian limited company with foreign shareholding. Capital, tax, and licensing all differ. The structure decision should precede everything else.
- Treating the SBU as a one-step process. SBU issuance from LPJKN depends on the entity holding a baseline number of SKK-certified personnel in the right roles. Builders frequently apply for the SBU before assembling the workforce documentation and find the application stalled. Sequence the personnel certifications first.
- Skipping SMK3 for the early period. SMK3 becomes mandatory once a construction entity reaches 100 employees or operates in high-risk activity. Foreign contractors scaling fast hit the threshold mid-project and then face a six-month audit cycle while site work continues. Plan SMK3 implementation earlier than the threshold forces it.
- Under-budgeting for ongoing certificate renewal. SBU is valid for three years, SMK3 audited every three years, K3 equipment eligibility certificates carry their own cycles. Renewal infrastructure has to live somewhere on the org chart from day one, not as a project-end task.
Setting up your Indonesian construction operations with Emerhub
Standing up a foreign construction operation in Indonesia is a multi-workstream project. We coordinate the PT PMA Konstruksi incorporation or BUJKA registration on your behalf, secure the construction-services SBU with the right qualification class from LPJKN, assemble the SKK personnel evidence the SBU application requires, file the K3 equipment-eligibility certificates relevant to your project scope, and run SMK3 implementation on a timeline that fits your hiring ramp rather than your project end-date.
For foreign contractors looking at IKN tenders, Bali infrastructure work, or the JETP-funded power buildout, the moment to scope your entity structure is before the bid documents request your SBU number. Talk to our Jakarta team and we will walk through the structural fit, the regulatory chain that applies to your specific project type, and the realistic timeline from kickoff to your first signed contract.
Frequently asked questions
Yes, for most construction-services KBLI codes. GR 28/2025 removed the previous foreign-ownership ceilings (67% for non-ASEAN, 70% for ASEAN) that applied under GR 5/2021. A small number of construction sub-activities remain reserved for Indonesian micro and small enterprises under Pres. Reg. 10/2021 (as amended by Pres. Reg. 49/2021), so the specific KBLI code you target still needs a check against the current BUPM positive-investment list.
BUJKA (Badan Usaha Jasa Konstruksi Asing) is a representative office of a foreign-incorporated construction parent, registered with the Ministry of Public Works and required to hold an SBU at Large qualification. BUJK PMA is a separately-incorporated Indonesian limited company with foreign shareholding, typically used for longer-term operations and full domestic-entity bidding rights. The choice depends on whether you are entering Indonesia for a single major project (BUJKA usually fits) or building a multi-year pipeline (BUJK PMA usually wins).
LPJKN typically issues an SBU within four to eight weeks of a complete application, assuming the underlying SKK personnel certifications are already in place and the entity has cleared OSS prerequisites. The longer pole tends to be assembling the SKK evidence, which can run a further two to four months when personnel certifications need to be obtained from scratch. The certificate itself is then valid for three years.
Construction-services activity sits across the 41xxx (building construction), 42xxx (civil engineering / infrastructure), and 43xxx (specialised construction activities) ranges, with consultancy-side work under 71xxx (architecture, engineering, and technical consultancy). The right code depends on the scope of work: building contractors typically register 41011, 41012, or 41017 depending on building type; infrastructure firms register from the 42xxx range. Most foreign contractors list multiple codes in their PT PMA’s articles of association to cover their full project mix.
The standard PT PMA capital framework applies under BKPM Reg. 5/2025: paid-up capital of IDR 2.5 billion per KBLI code and a total investment commitment of IDR 10 billion per project location. Construction-services PT PMAs aiming for Large SBU qualification often capitalise above the minimum to demonstrate financial capability sufficient for the project scale they want to bid on. BUJKA representative offices do not carry the PT PMA capital floor but face their own working-capital and bank-guarantee expectations tied to project scope.
Yes, with conditions. Foreign construction entities can bid on Indonesian government and IKN projects when the project meets at least one of three criteria: high risk, advanced technology, or high contract value. Many IKN tenders also require a joint operation arrangement with an Indonesian construction entity that holds the relevant SBU classes. TKDN (Domestic Component Level) requirements on government-funded work add a further constraint on materials sourcing and local hiring.
SMK3 (Sistem Manajemen Keselamatan dan Kesehatan Kerja) is mandatory for construction companies that employ at least 100 workers or operate in high-risk activities, under Ministry of Manpower Regulation 26/2014. The audit cycle runs every three years. Foreign contractors often hit the headcount threshold mid-project as site teams scale, so planning the SMK3 implementation against the project ramp rather than as a year-end task avoids the common scenario of an audit-driven pause to live site work.
Foreign workers on Indonesian construction sites require the standard manpower-permit stack: an RPTKA (manpower utilisation plan) approved by Kemenaker, an IMTA work permit, and a Working KITAS (E23) limited stay permit issued under the sponsoring entity. Some specialised roles qualify for expedited processing where technical-skill requirements are documented in the RPTKA. Renewal cycles run annually for most KITAS classes, with conditions covered in our Working KITAS renewal guide.
