New regulation for construction businesses

Indonesia’s Construction Law 2 of 2017 required foreign investors to establish either a representative office in cooperation with an Indonesian construction company (representative office), or incorporate a legal entity in a joint venture (JV) with an Indonesian construction company in order to perform construction services in Indonesia. On 13 June 2019, the Minister of Public Works and Public Housing implemented the 2019 Regulation, providing further guidance to foreign investors providing construction services. Regardless of whether a foreign investor has established a representative office or a JV, the 2019 Regulation requires the relevant entity to register an “Online Single Submission” and obtain a “Single Business Number”. Thereafter, it will be granted an interim construction licence valid for 30 working days. An interim construction license will be converted into an effective construction licence after 30 working days if the representative office or JV fulfills certain commitments. For example, it must obtain a Business Entity Certificate from the National Construction Development Institution. An effective construction licence will last for three years for representative offices. There is no limit on the construction licence for JVs provided they carry out at least one project every three years. During the period of a construction licence, the licencee is required to submit regular reports to the Minister of Public Works and Housing on their construction projects in Indonesia.

• Type:

  • Entry and establishment (Approval and admission)

• Industry:

  • Services (Construction)

• Sources:

  • Menteri PekerJaan Umum Dan Perumahan Rakyat Republik Indonesia, PERATURAN MENTERI PEKERJAAN UMUM DAN PERUMAHAN RAKYAT REPUBLIK INDONESIA NOMOR 09/PRT/M/2019 TENTANG PEDOMAN PELAYANAN PERIZINAN BADAN USAHA JASA KONSTRUKSI ASING , http://jdih.pu.go.id/produk-hukum-detail.html?id=2646, 13 Jun 2019
  • Lexlology, Indonesia’s 2019 Regulation for construction businesses: Important news for foreign investors, https://www.lexology.com/library/detail.aspx?g=96681c2e-6eb2-45c7-9fad-19127cf61faa&utm_source=Lexology+Daily+Newsfeed&utm_medium=HTML+email+-+Body+-+General+section&utm_campaign=Lexology+subscriber+daily+feed&utm_content=Lexology+Daily+Newsfeed+2019-10-28&utm_term=, 24 Oct 2019