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Matters that need to be considered in establishing a Foreign Construction Services Business Entity (BUJKA) in Indonesia

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The construction industry has grown significantly over the past few years, becoming a driving force for the Indonesian economy. Currently, the construction industry is not only run by local companies, but there are Foreign Construction Services Business Entities (Badan Usaha Jasa Konstruksi Asing) (“BUJKA”) that play a role. With the OSS-RBA system, the government has made licensing easier for BUJKA to run projects in Indonesia. This is realized with the BUJKA representative license, which is a license granted by the government to BUJKA to carry out construction activities in Indonesia. In this case, BUJKA can open a BUJKA representative office and/or BUJKA with an Indonesian legal entity as stipulated in PP 5/2021. However, there are several conditions that must be met by BUJKA, including:

  1. Representative Office of Foreign Companies
    The Foreign Company Representative Office (KPPA) must be incorporated in the country of origin as stipulated in Article 84, paragraph 4, of GR 5/2021. 

  2. Company Leader
    The highest leader in the KPPA must be an Indonesian citizen who is responsible for the technical implementation of BUJKA construction in Indonesia.

  3. Qualification and Classification
    To obtain a license, the BUJKA must be classified as a large qualification (B2). The number of sub-qualifications is unlimited, depending on the construction field.

  4. Business Licensing
    With the OSS-RBA system, licensing for BUJKA no longer requires a Construction Services Business License (IUJK) or Construction Services License (SIUJK). Based on Article 99 of PP 5/2021, this has been replaced with a Standard Certificate, where the applicant needs to prepare:
    a. Construction Business Entity Certificate (SBU);
    b. Certificate of Expertise (SKA) or Certificate of Work Competency (SKK) in construction;
    c. License.

Submission of these matters can be done through the OSS Institution in several stages, such as application, payment of fees, verification and validation, and approval or rejection of the SBU Construction application.

In addition, business actors can also be subject to administrative sanctions if they violate the provisions in the establishment of BUJKA as stipulated in Article 415 paragraph (1) of GR 5/2021, including:

  1. Written warning; 
  2. Imposition of administrative fines; 
  3. temporary suspension of business activities; 
  4. Blacklist; and/or 
  5. Revocation of business licenses.

This is a brief explanation of the things that need to be considered in establishing a Foreign Construction Services Business Entity (BUJKA) in Indonesia. If you need assistance in establishing BUJKA in Indonesia, please contact us at Solusi Idjin Indonesia (“SOLID“), who are ready to assist you.