LICENSING SERVICE GUIDELINES FOR

FOREIGN CONSTRUCTION SERVICE

COMPANY

(PERMEN PUPERA 09/2019)

Viola Octavanya
STEPS AND TYPES OF CERTIFICATION AND
REGISTRATION PROCESS OF FOREIGN CONSTRUCTION
SERVICE COMPANY (UU 2/2008)

Certificate of Foreign
business (SBU) construction
Expert •Eligible to form Joint service company
Association
certification (SKA) Operational permit
membership (KTA
& Skills •Eligible to enter •Representation office
Asosiasi) A or B tender/auction list in
Certification (SKT) •Eligible to enter
•Valid for a year construction service
Valid for 3 years for governmental or tender/auction list in
private projects construction service
for governmental or
•Valid for 3 years private projects
LICENSING SERVICE

• Types of representative permit services includes:

a. First issuance;
b. Renewal;
c. Data update; and
d. Revocation on request
• Foreign construction service company that will provide construction service is required to hold business
permit, established by OSS institution for and in the name of minister, which consists of:
a. Representative permit for representative office that will conduct construction services all
through Indonesia
b. Foreign investment permit for construction service company that requires foreign investment
in its service
• Permit types for representative and foreign investment permit includes business classifications such as:
a. Construction consulting services in which the entire or partial activities are on assessment,
planning, designing, supervision, and implementation of building construction(B Sub-
qualification for first issuance, update/renewal);
b. Construction works in which the entire or partial activities are on construction, operation,
maintenance, dismantle, and rebuilding of a building (B2 Sub-qualification for first issuance,
B1/B2 Sub-qualification for update/renewal); or
c. Integrated construction works which is a combination of entire or partial to construction
consulting services and construction works (B2 Sub-qualification for first issuance, B1/B2 Sub-
qualification for update/renewal).
LPJK 2/2013 COMPULSORY REQUIREMENTS FOR B1
AND B2 CLASSIFICATION
B1
Expert • Compulsory to have 1 expert
with medium SKA qualification
hired as Technical Person In
Charge (PJT).
• Compulsory to have 1 expert
with medium SKA qualification
hired as Classification Person
in Charge (PJK). A PJK can be
of maximum 2 different
classifications.
Net worth At least Rp. 2.000.000.000,- (two
billion Rupiah).
Work experience Highest working achievement of Rp.
3.330.000.000,- per sub field or
cumulatively at least Rp.
10.000.000.000,- per sub field in the
past 10 years.
B2
• Compulsory to have 1 expert
with medium SKA qualification
hired as Technical Person in
Charge (PJT).
• Compulsory to have 1 expert
with SKA qualification that
levels with PJT hired as
Classification Person in Charge
(PJK).
At least Rp. 50.000.000.000,- (fifty
billion Rupiah).
To have the highest working
achievement of Rp. 83.330.000.000,-
per sub field or cumulatively at least
Rp. 250.000.000.000,- per sub field
in the past 10 years.
REPRESENTATIVE PERMIT
• Representative permit is valid for 3 years and can be renewed.
• Representative permit is requested by Indonesian PIC of the construction service as the
chairman of the representative office. In case it is not possible to position an Indonesian
citizen in that position, then the Indonesian will be positioned as PIC for the technical and
operations of the business.
• The representative office for foreign construction service company or foreign investment
company in construction service can only conduct high-risk market segment, high-
technology, and/or high-cost construction service.
HIGH-RISK
• When the actual construction and the utilization dangers public safety, valuable goods,
human life and environment.

• When the actual construction and the utilization uses a particular construction method,
high-tech equipment, particular construction equipment, and also requires massive expert
workers.

• When the construction value is at least Rp 100.000.000.000,- (a hundred billion Rupiahs),

with planning/supervision in construction service value is at least Rp 10.000.000.000,- (ten
billion Rupiah).
FIRST ISSUANCE AND RENEWAL OF
REPRESENTATION PERMIT

Issuance of
representative
permit based on
commitment to Commitment The issuance of
Payment for the
Administration on the minister as Commitment fulfillment active
representative
OSS stated on OSS fullfillment verification and representative
permit cost
based on the validation permit
standard
industrial
classification
• Renewal for the representative permit is done before expiration date of the
representative permit.
• OSS issues effective representative permit through OSS system based on
approval notification of commitment fulfillment from the minister.
• OSS institution will annul the representative permit if the applicant:
a. Did not fulfill the commitment;
b. Commitment fulfillment time period exceeds the set deadline; and/or
c. No payment.
 COMMITMENT-BASED PERMIT

Issuance of
representative
permit based on
Commitment The issuance of
commitment to the Payment for the
Administration on Commitment fulfillment active
minister as stated representative
OSS fulfillment verification and representative
on OSS based on permit cost
validation permit
the standard
industrial
classification
 Minister will conduct
Commitment fulfillment is
verification and validation OSS institution issues
to be done within 30 days
Documents for on the documents in 5 Minister will notify the foreign investment permit
after OSS institution
commitment fulfillment is days at the latest, verification and validation through OSS system
issued commitment based
filed to the minister. counted from the result to OSS institution. based on the notification
foreign investment
documents are declared for minister’s approval.
permit.
completed.

• Technical Team is formed by the Minister to aid the conduct of business permit service.
• Technical Team functions as follows:
a. To do verification and validation process for the commitment fulfillment documents;
b. To aid with the supervision and evaluation on the business activities; and
c. To report the verification validation, supervision and evaluation.
• The operational cost of the technical team is charged to the state budget (APBN).
• Commitment-based permit issued through OSS institution is done by filling data
of at least:
• The amount of capital;
• The name and standard industrial classification; and
• Statement on commitment fulfillment.
• OSS institution informs the minister through OSS system on the issuance of
foreign investment permit
• OSS institution will revoke the permit in case the applicant:
a. Did not fulfill the commitment; and/or
b. Commitment fulfillment time period exceeds the set deadline.
• Commitment fulfillment for foreign investment permit includes:
• Owns business identification number with big qualification;
• Qualified for capital structure composition for construction service company with
foreign investment; and
• Qualified for technical criteria of investor
DATA UPDATE AND REVOCATION ON REQUEST

Commitment
Data update Verification Revocation
fulfillment
UPDATE AND REVOCATION
DATA UPDATE REVOCATION
Data update includes: Foreign Investment permit revocation is done by filling data
a. Change of the representative office name; of at least:
b. Change of the office address; a. The name of foreign construction service
c. Change of chairman; company;
d. Change of technical/operational PIC; and/or b. Business Identification Number;
e. Change of the subclassification for the standard c. Transcript on Indonesian Tax Number or tax
industrial classification. clearance certificate revocation; and
d. Statement letter on commitment fulfillment.

Data update will not affect expiration date for the Revocation is done after fulfillment of obligations such as:
representative permit. a. Taxation;
b. Debt payment; and
c. Fulfillment of obligations (commitment, in the
case of representative office) in conducting the
permit including paid sanction cost for
administrative fine.

• Minister will verify and validate the commitment fulfillment in 5 days at the latest,
valid after the evidence document is accepted.
• Foreign Investment permit revocation is done by OSS after the minister’s verification
and validation is obtained.
FOREIGN INVESTMENT – TECHNICAL CRITERIA
Technical criteria for foreign investor consists of Local Investor and Foreign Investor.
Local Investor
• Construction service company;
• Hold construction service
company permit;
• Large qualification; and
• To have the business field and
business qualifications up to par
with foreign investor.
Foreign Investor
• Construction service company;
• Hold construction service
company permit;
• Large qualification; and
• To have the business field and
business qualifications up to par
with local investor.
CONDUCTING REPRESENTATIVE PERMIT AND FOREIGN
INVESTMENT PERMIT
REPRESENTATIVE PERMIT FOREIGN INVESTMENT PERMIT
a. Providing statement letter proving that the PIC and a. Providing statement letter proving that the director,
technical PIC is not positioned as director, commissioner, commissioner, PIC, and technical PIC is not positioned
PIC, and technical PIC in local and foreign construction as director, commissioner, PIC, and technical PIC in
services at the same time; local and foreign construction services at the same
b. Indonesian citizen should be positioned as the PIC and/or
time;
technical PIC;
b. Technical PIC is required to have an expert competency
c. Technical PIC is required to have an expert competency
certificate in qualification range 9 or certificate in Asean certificate in qualification range 8 or certificate in
Architect or certificate in Asean Chartered Professional Asean Architect or certificate in Asean Chartered
Engineer; Professional Engineer;
d. Establish an operational Joint Operational with local c. Only conduct works in accordance to business sub
construction service company; qualification stated in the representative permit
e. Prioritize local material and technology usage; d. Informing report on yearly business activity;
f. Conducting technological transfer; e. Registering business experiences;
g. Formed as a company with qualification up to par with large f. To have at least 1 construction work within the time
qualification; frame of the business field certificate;
h. Only conduct works in accordance to business sub
g. To hire Indonesian employee as a partnering employee
qualification stated in the representative permit;
in the management and technical sector at least 1 level
i. Informing report on yearly business activity;
j. Registering business experiences; lower than foreigner position in accordance with the
k. To have at least 1 construction work within the time frame suitable classification field.
of the representative permit;
l. To hire more Indonesian citizens than foreigner in the
expert scale; and
m. To hire Indonesian employee as a partnering employee in
the management and technical sector at least 1 level lower
than foreigner position in accordance with the suitable
classification field.
TECHNOLOGY TRANSFER

• Technology transfer is a transfer of the ability to utilize and master the science
and technology within institutions, companies or people, exists within domestic
domain or even in overseas to domestic, vice versa.
• The collaboration may be arranged through sub-consultancy agreements,
project consortia, joint ventures or management agreements.
• The conduct of technology transfer is done with these requirements:
a. Draft profiles on usage, utilization, and technological advancement forwarded to
the Joint Operational partner and/or Service User in Indonesian language and
English language;
b. Position Indonesian labour as partners to the foreign labour;
c. Conduct research on expertise and managerial aspect for partnering Indonesian
expert staff and/or Indonesian expert staff at least once for every project; and
d. Facilitate Indonesian citizen to obtain recommendation by the Minister to conduct
trainings, practical work and/or academic trainings on the concerning project.
JOINT VENTURE

• Done with the principals of equality in large qualification, equality service, and a
joint responsibility.
• Starts at the process of procurement, execution, until the finishing of the
construction work.
• Local construction service company as a partner for Joint Operational has to
fulfill certain criteria such as:
a. A legal entity of a limited liability company;
b. Hold business permit on large qualification and the same business category as
the representative office;
c. Hold construction service company permit; and
d. In the form of BUMN, BUMD, or BUMS in which the shares ownership is 100%
owned by Indonesian citizens and/or national entity.
TERMS IN CONDUCTING THE JOINT VENTURE
Construction Work
or
Integrated Construction
• At least 50% of construction cost is
done domestically; and
• At least 30% of construction cost is
done by local construction service
company partnering with Joint
Operational.
Construction Service
• The entire work of Construction
Consultation is conducted
domestically; and
• At least 50% of the work of
Construction Consultant is
conducted by local construction
service company partnering with
Joint Operational.
SUPERVISION AND EVALUATION

• Minister, aided by the technical team, conducts supervision and evaluation on

commitment fulfillment and the mandatory conduct of business permit.
• The supervision and evaluation is conducted yearly by:
a. Selecting sampling procedures; and/or
b. Observation mechanism on:
1. Yearly business activity report;
2. Direct review to the company; and/or
3. Field review.
REPORT

• The Yearly Business Activity Report is to be informed to the minister on April 30th on
the following year through internet or VPN-based construction service business
application.
• The Yearly Business Activity Report consists of at least:
a. Company data;
b. Ongoing construction service works;
c. Contract document between user and subcontracting company;
d. Joint Operational partner data;
e. Joint Operational partner contract document;
f. Technology transfer document, specifically for Representative Office;
g. Subcontracting company data;
h. Business license document from subcontracting company and Joint Operational partner;
i. Company certificate (SBU) document of Joint Operational partner and subcontracting
company;
j. Payment receipt document to a subcontracting company;
k. Company financial report that has been audited by registered public accountant; and
l. A report on the organizational health index.
• Registration of business experience is done yearly to the minister and it is part
of the yearly report, proven by experience list document that consists of at
least:
a. The name of work set;
b. Users;
c. Work implementation year;
d. Work worth; and
e. Performance.
ADMINISTRATIVE SANCTIONS

• The construction service representative company and the foreign investment

construction company can be charged with administrative sanctions if the
company violates art. 3 (3) and (4), art. 11 (1), art. 23 (1) letter a, art. 29, and
art. 30.
• Administrative sanctions by the minister can be in the form of:
a. Written warning;
b. Administrative fine paid as PNBP;
c. Momentary suspension of construction works activity;
d. Listed in the black list;
e. License frozen; and/or
f. License revoked by OSS agents based on administrative sanctions recommendation.
• The construction service representative company and the foreign investment
construction company is subject to hand paid administrative fine receipt to the
minister.
• The black list sanction is valid for 3 years, started from the moment the sanction
letter is issued and it has to be published in the integrated construction service
information system.
• The construction service representative company and the foreign investment
construction company charged with administrative fines of business license
revocation can re-register after 5 years of revocation.
Terima Kasih

Menara Palma 10th Floor Suite 10-03

JL. H.R. Rasuna Said Blok X-2 Kav.6
Jakarta Selatan 12950, Indonesia
Ph: +62 21 5795 7550
F: +62 215795 7551