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Aug

10

Construction Equipment Ownership for Foreign Investment Construction Service Business Entities (BUJK PMA) and Construction Representative Offices (KP BUJKA) in Indonesia

Infrastructure investment has been identified as one of the key catalysts for unlocking a country's overall economic potential, promoting growth, creating jobs and reducing poverty. Efficient infrastructure is also needed to lower distribution costs, make prices of goods and services more affordable and improve living standards (ADB 2017). Good infrastructure brings better social and economic mobility, leading to better living conditions. For Indonesia, a country with a large population and an archipelagic territory, developing efficient infrastructure is important for ensuring sustainable and inclusive growth, which leads to construction being one of the primary business activities in Indonesia.

The qualifications for a construction services sub-sector business entity for construction consulting services and construction works as stated in Article 84 of Indonesian Government Regulation No. 5 of 2021 concerning Risk-Based Business Licensing ("GR 5/2021") include the following:

  1. Small Qualification;
  2. Medium Qualification; and
  3. Large Qualification.

In accordance with Article 84 GR 5/2021, foreign investment construction service business entities ("BUJK PMA") and representative offices for foreign construction service companies ("KP BUJKA") are required to meet the "Large Qualification" for construction consulting services and construction works. In determining the qualifications, evaluations are done on several documents, one of which is the ability to provide construction equipment.

The ability to supply equipment shall be provided to the Company no later than 30 (thirty) calendar days from the Construction Business Entity Certificate or Sertifikat Badan Usaha (SBU) being issued. The ability to provide construction equipment is excluded for general construction consulting services.

The ability to supply construction equipment must meet the requirements of at least the main equipment for each sub-classification. The regulation in Indonesia stipulated in Article 95 of GR 5/2021 states that the requirements are as follows:

  1. For Large Qualification, it is required to have at least three main pieces of equipment per sub-classification
  2. For the KP BUJKA, it is required to have at least three main pieces of equipment per sub-classification.
  3. For integrated construction work business activities conducted by businesses with Large Qualifications, it is required to have at least three main pieces of equipment per sub-classification.
  4. For integrated construction work business activities conducted by BUJKA's representative offices, it is required to have at least five main pieces of equipment per sub-classification.

The exhaustive lists of main equipment depending on each sub-classification that need to be provided by BUJK PMA and KP BUJKA, respectively, are stipulated in the Regulation of the Minister of Public Works and Public Housing No. 6 of 2021 Concerning Standards for Business Activities and Products in The Implementation of Risk-Based Business Licensing in the Public Works and Public Housing Sector. The main requirement that must be met is equipment that is functional and operational. For example, the minimum equipment criteria for the office building construction sub-classification (BG002) are tower crane, truck crane, concrete mixer, tamping rammer, concrete pump, vibro hammer, generator set, excavator, motor grader, wheel loader, bulldozer, pad foot roller, sheep foot roller, rig bore pile, dump truck, flat bed truck and water tank truck.

If you intend to establish a BUJK PMA or KP BUJKA in Indonesia, Schinder Law Firm is one of many corporate law firms in Indonesia that have handled a lot of similar establishments, with many experienced and professional civil lawyers with investment expertise, making it one of the top corporate consulting law firms in Indonesia. Feel free to contact us at info@schinderlawfirm.com for further consultation.

Author: Dewi Susanti