Latest changes to the Negative Investment List revised how foreign investors can open a construction company in Indonesia.
There are two ways in opening a construction company in Indonesia – by establishing a limited liability company (PT PMA) or via Foreign Construction Service Representative Office (BUJKA).
This article provides foreign investors the flow of opening a construction company in Indonesia by understanding the incorporation of PT PMA Construction Company, and how to choose your classification and sub- classification to get the Izin Usaha Jasa Konstruksi/ IUJK (Permit for Construction Services).
The operation of Badan Usaha Jasa Konstruksi Asing/ BUJKA (Foreign Construction Representative Office) will be discussed later after the process of obtaining IUJK.
Table of contents
Construction Company Foreign Ownership Limitation
Jasa Konstruksi/ Jasa Pelaksana Konstruksi (Construction Implementation Services) that are using high technology or high risk with a work value of more than IDR 50 billion (approx. USD 375,000) are open 67% for non- ASEAN investors and 70% from ASEAN countries.
The same limitation applies to Jasa Konsultasi Konstruksi (Construction Consulting Services), so that the small size projects are to be reserved for local SMEs. This means, foreign construction services companies can only qualify for construction projects with a value of more than IDR 50 billion (approx. USD 75,000), while small size projects are reserved for local construction companies.
Some lines of business in the construction sector that are reserved for local SMEs are increasing significantly, i.e. from IDR 1 billion (approx. USD 75,000) to IDR 50 billion (approx. USD 4 million).
Required local partner
Once you have met the minimum investment requirement, you will need a local partner as part of the requirements in establishing a PT PMA.
The local partner, as amended by Article 20 of LPJK (Construction Services Development Board) Regulation No. 10 of 2014, must own a cumulative experience within the field. Details of requirements needed from the local partner or shareholder will be described further in this article under the large- scale qualification section.
We offer a full service for the establishment of PT PMA Construction Company, starting from finding a qualified local partner (active or silent depending of your preference) to all the required certificates in obtaining your Izin Usaha Jasa Konstruksi/ IUJK (Permit for Construction Services).
- Establishment Type : Foreign- Owned Private Limited Liability Construction Company
- Ownership Allowance : Maximum 67% for Foreigners
- Mandatory Licenses : PT PMA Company Establishment Certificate, ISO Certification, IUJK, SBU, GAPEKSINDO (KTA and SBU), IUT and SKA
- Estimated Process Period (incl. License) : 3-4 months
Construction Contractor or Construction Consultant
The first requirement to establish a PT PMA construction company is by deciding which type of construction services you want to set up in Indonesia, either as a contractor or as a consultant; or as both- integrated construction service.
Scope of Work
|Construction Contractor||Building contractors, warehouse and industrial building, concrete work, civil construction, foundation work (including pile driving), construction equipment rental, installation mechanical and electrical, fabrication and construction, specialty contractor, onshore and offshore pipeline installation, platform, etc.|
|Construction Consultant||Architectural design, engineering design, integrated engineering design, urban planning, testing and analysis, technical inspection services, surveying services, geologic and geophysical surveying, project management, treatment and disposal of non-hazardous waste, etc.|
After your company is incorporated in Indonesia, you will need to choose your classification and sub- classification according to the type of your business for Construction services in Indonesia.
Integrated construction service companies in Indonesia
There have been several regulatory changes in the construction industry and is a related to new registration rule for Integrated Construction Service Companies in Indonesia.
LPJK Regulation No. 3 of 2015 regarding the First Amendment to LPJK Regulation No. 5 of 2014 on Integrated Construction Services Registration amended the requirements for the issuance of Surat Buka Usaha/ SBU (Business Entity Certificate) for integrated construction service companies.
An SBU is a level certificate formally acknowledging your company’s level of competence and capability and the SBU for integrated construction service companies will be issued based on the Classification and Qualification of the business.
Classification of Integrated Construction Service Companies
The working Classifications for integrated construction services as stipulated under Article 8 of LPJK No. 5 of 2014 are as follows:
- Integrated services for Transportation Infrastructure
- Integrated services for Construction of Water Supple and Sanitation Work
- Integrated services for Construction of Manufacturing Facilities
- Integrated services for Construction of Oil and Gas Facilities
Large- Scale Qualification
An integrated construction service company’s qualification is now categorized as Large- Scale Qualification and is divided into 2 sub- qualifications in terms of (i) Net Worth, based on the total value of your company’s equity (ii) Experience and (iii) Manpower.
Large 1 (“B1”)
Large 2 (“B2”)
|Must have a net worth of at least IDR 10 billion (approx. USD 700,000)||Must have a net worth of at least IDR 50 billion (approx. USD 4 million)|
|Must have experience in construction work over the past 10 years with a total cumulative value of at least IDR 50 billion (approx. USD 4 million), or have been involved in a construction project with a minimum value of IDR 16.6 billion (approx. USD 1.3 million) in the last 10 years||Must have experience in construction work over the past 10 years with a total cumulative value of at least IDR 250 billion (USD 20 million), or have been involved in a construction project with a minimum value of IDR 83.33 billion (approx. USD 6.8 million) in the last 10 years|
|Must have engineers of at least Principal Level with Sertifikat Keahlian/ SKA (Certificate of Expertise) to be assigned as Technical and Classification Supervisors||Must have engineers of at least Medium Level with Sertifikat Keahlian/ SKA (Certificate of Expertise) to be assigned as Technical and Classification Supervisors|
Izin Usaha Jasa Konstruksi / IUJK (Permit for Construction Services)
Process for obtaining IUJK can be broken down into three stages as seen in the table below.
Obtainment of IUJK
|Acquisition Process||Details||Emerhub’s Service|
|Issuance of Sertifikat Keahlian/ SKA (Certificate of Expertise)||SKA is a license granted to skilled workers with competence in construction sector.|
SKA is divided into 3 grades (Beginning, Intermediate and Advanced SKA) according to the type of companies
|Issuance of Sertifikat Keterampilan/SKT (Skills Certificate)||SKT is a license issued to construction engineers|
|Registration certificate of Kartu Tanda Anggota Asosiasi/ KTA (Membership in Construction Association Registry)||KTA is a proof of membership at the Construction Association Registry that a company registers according to the type of company. Association registered in the LPJKN is an officially approved association|
|Issuance of Sertifikat Badan Usaha/ SBU (Certificate of Business)||SBU is an official approval showing grade or internal competence and company’s ability depending on the types and conditions of business|
We assist you in obtaining :
If you already have KTA, SKA and/or SKT, you can proceed to the issuance of SBU, but if not, you can use our service to obtain them
|Arrangement of Surat Izin Usaha Jasa Konstruksi/ SIUJK (Letter of Permit for Construction Services)||SIUJK is an approval letter issued by the Provincial Government/ Municipal/ District accordance Qualifications and Classification of the company in the SBU||We compiled all the existing process documentation (incl. SKA and/or SKT, KTA, and SBU) and send it to BKPM for the issuance of IUJK.|
Badan Usaha Jasa Konstruksi Asing/ BUJKA (Foreign Construction Representative Office)
A BUJKA serves as a local representative for foreign domiciled construction firms and is applicable to large scale foreign construction firms only as they may only engage in large scale, highly technical projects. In order to operate as a local representative for a construction firm, the BUJKA must first obtain IUJK.
Under Minister of Public Works Regulation No. 5 of 2011, regarding the establishment of BUJKA, your company shall comply with the following requirements :
- It is a join operation with a local company in a form of PT
- It is classified as a ‘large-scale qualification’
- It only involves in a complex, high risk, and/or highly technical construction project
- It possesses an SBU and an IUJK
Below are some details to help you further understand about BUJKA and how Emerhub can help you with the process of obtaining your BUJKA Certificate.
- Establishment Type : Representative Office
- Mandatory Licenses : Foreign Representative Office Certificates, KITAS, NPWP, KTA, SKA/ SKT, SBY
- Estimated Process Period : 3-4 months
Construction Company Registration in Indonesia
Opening your own construction company in the form of PT PMA (foreign investment limited liability) in Indonesia might be a difficult situation as it requires a massive amount of capital and the cumulative experience within the field to meet the criteria for construction company registration in Indonesia.
If you don’t have a sufficient amount for the investment in Indonesia or just simply wish to have a representative office for your construction company, we will be guiding you to obtain a license for BUJKA (Foreign Construction Services Representative Office), with no minimum investment, shareholder and director requirement.
However, having a local partner (either as an active/ a silent one) to start with the construction activity is still essential for both PT PMA and BUJKA.
As I have mentioned earlier, there are two types of foreign construction entity in Indonesia that we are here to help you with, PT PMA and BUJKA.
Emerhub will assist you throughout the process including the following :
- Consultation throughout the process
- English translation of all incorporation documents
- Opening a Bank Account
Investing your time and effort into finding a qualified partner and go through each step alone might be laborious. It is one of Emerhub’s visions to provide you the necessary services in opening a construction company in Indonesia flawlessly.
Drop us an email today [email protected] to help you in opening a construction company in Indonesia. Our consultants will be ready to provide you instructions to be able to conduct construction business in Indonesia from start to finish.