Indonesia – New Construction Licensing Procedures And Rules.

6 September, 2019

 

The Minister of Public Works and Public Housing (“MOPWH”) recently issued 2 (two) new regulations, namely (i) Regulation No. 8/PRT/M/2019 on Licensing Guidelines for NationalConstruction Services Business (“Reg 8/2019”), and (ii) Regulation No. 9/PRT/M/2019 on Licensing Guidelines for Foreign Construction Services Business Entities (“Reg 9/2019”), synchronizing the licensing procedures with Indonesia’s Online Single Submission system (“OSS”), particularly in relation to the following:

 

• Individual Business Registration Certificate (Tanda Daftar Usaha Perseorangan or “TDUP”), for Indonesian citizens;
• Construction Services Business License (Izin Usaha Jasa Konstruksi or “IUJK”), for state-owned enterprises and domestic business entities (“Domestic Business Entity”);
• Foreign Construction Company Representative Office (“Rep Office”) License (Izin Perwakilan or “IP”); and
• Foreign Investment Construction Company (“PT PMA”) Business License (Izin Usaha Penanaman Modal Asing or “IUPMA”).

 

Prior to the issuance of these new MOPWH regulations, licenses had to be sought manually from various separate government authorities. Therefore, the issuance of these 2 (two) new regulations shows a serious commitment by the Indonesian Government to improve transparency and efficiency in public services.

 

The main changes introduced by the new regulations include, among others, changes to the validity period of construction licenses and key employees’ restriction, as summarized and compared below.

 

No.	Matters	Previous MOPWH Regulations	New Regulations (Reg 8/2019 and/or Reg 9/2019)
1	Licensing Application and Procedure	TDUP and IUJK: application to be filed with the relevant Regional Government. IP and IUPMA: application to be filed with BKPM.	TDUP, IUJK, IP and IUPMA: application to be made through the OSS.
2	Effectiveness of the License	Effective upon issuance.	Once issued, the relevant license will be subject to fulfilment of certain commitments set by the relevant Regional Government (for TDUP or IUJK) and by MOPWH (for IP or IUPMA).
3	Validity Period	TDUP: Not specifically regulated. IUJK, IP, and IUPMA: 3 years (extendable).	TDUP, IUJK, and IUPMA: no expiry – remain valid as long as the holder continues its construction business activity. IP: 3 years (extendable).
4	Reporting Obligation	TDUP holders: None. IUJK holders: Annual reporting to the Regional Government. IP holders: Annual reporting to MOPWH. IUPMA holders: Semi-annual reporting to BKPM.	TDUP and IUJK holders: Annual reporting to the Regional Government. IP and IUPMA holders: Annual reporting to MOPWH through its electronic system.
5	Position of Key Employees	Not specifically regulated.	The following specific rules apply:   –  For PT PMA and Domestic Business Entity: Its Director, Commissioner, Business Entity Manager (“PJBU”) and/or Business Entity Technical Manager (“PJTBU”) must not concurrently hold similar positions in other Indonesian construction entities. –  For Rep Office: § Its PJBU and PJTBU must not concurrently hold the position of Director, Commissioner, PJBU, and/or PJTBU in other Indonesian construction entities. § The PJBU and/or PJTBU of a Rep. Office must be an Indonesian citizen.
6	Qualifications of Local Shareholders in PT PMA	Must meet the minimum requirements as laid down in WTO’s General Agreement on Trade in Services.	Must be a Domestic Business Entity with big qualification (kualifikasi besar).

 

For more information, please contact:

 

Rainer Faustine Jonathan, Walalangi & Partners (W&P) 

Rjonathan@wplaws.com