Qualification For Foreign Construction Services In Indonesia
A. LEGAL BASIS
For specific regulation governing the foreign construction services in Indonesia, the government has issued the Minister of Public Works Regulation number 10/PRT/M/2014 on Guidelines on Granting Permits for Foreign Construction Services Business Entity Representatives (MPWR Regulation 10/2014).
B. REQUIREMENT FOR FOREIGN CONSTRUCTION SERVICES BUSINESS COMPANY
- The development of the construction services in Indonesia is well reflected from the number of business licenses granted to companies conducting business activities in the construction services sector either as contractors or consultants, including business permits, granted for foreign construction services, operating on large construction projects throughout Indonesia.
- Based on MPWR Regulation 10/2014, the Foreign Construction Services Business Company or Badan Usaha lasa Konstruksi Asing (BUJKA) is a 100% foreign construction service company established under foreign law, domiciled and has overseas headquarters.
3. BUJKA shall obtain the permit and open its representative office in Indonesia as a requirement to conduct business activities as construction service provider. The permit is issued by the Indonesian Investment Coordinating Board (BKPM) through one stop integrated service.
- BUJKA shall also have an equivalent Sertifikat Badan Usaha/Business License Certificate or certificate from the country of origin to be attached in its application for applying the BUJKA license.
- BUJKA shall have net asset value as evidenced by the financial statements by public accountant: (i) For the construction service business, the net asset value is above Rp. 50,000,000,000 (fifty billion Rupiah) and (ii) For the services planner and construction supervisor (consultant) business, the net worth values above Rp. 500.000.000 (five hundred million Rupiah).
C. BUJKA BUSINESS ACTIVITIES REQUIREMENT
- In order to conduct any construction work in Indonesia as stipulated in Article 11 of MPWR Regulation 10/2014, BUJK shall enter into a cooperation with at least one local construction service provider (BUJK) in the form of joint operation or Kerjasama Operasi.
2. The joint operation entered by BUJKA and BUJK may conduct the construction works in one or several projects and shall not be considered as new established entity.
3. The proposed BUJK in the joint operation cooperation shall be wholly (100%) owned by Indonesian parties, if the proposed BUJK is not Indonesian parties wholly owned, then the BUJK may apply to the Minister of Public Works for approval of joint operation cooperation, provided that the BUJK is at least 65% owned by Indonesian parties.
- The joint operation cooperation between BUJKA and BUJK shall carry out: (i) at least 50% of the value of the whole construction project (Project Value) domestically (either by the BUJKA or BUJK); and (ii) at least 30% of the Project Value domestically by the BUJK.
5. Furthermore, BUJKA is obliged to transfer the knowledge to the Indonesian employees in the joint operation cooperation. BUJKA must produce a transfer of knowledge plan and appoint an Indonesian employee who will later issue a statement to confirm the transfer of knowledge has occurred. The transfer of knowledge plan and statement of the employee must be submitted to the Minister of Public Works.