Construction Company (BUJK) in Indonesia & How to Set Up?Construction service is an industry that continues to grow along with the rapid development of the times. Building new or additional structures seems to be an inevitable part of human progress. The development of an area, the construction service business will grow. 

The construction service business is one of the activities in the economic, social and cultural fields that has an important role in achieving various targets in supporting the achievement of national development goals. 

Because the need for buildings used for housing, industry, public facilities and so on is increasing.

Before going any further explanation. Do you know what a construction contractor is? 

A construction contractor is an activity to build facilities and infrastructure. In architecture or civil engineering. A construction is also known as a building or infrastructure unit in an area or in several areas. In short, construction is defined as the overall object of a building which consists of structural parts. 

In Indonesia, this business sector is in great demand by foreign and local investors. Despite the high level of complexity, to obtain a license. For now, Indonesia with its latest regulations makes it easier for foreign investors or local companies to get it. With an easy and short licensing process, it is very beneficial for foreign investors to invest in Indonesia as well as local companies to run their business.

Below we will explain about how to set up a construction service company in Indonesia (BUJK), the types and classifications, requirements and procedures for local or foreigners who will set up a construction service company in Indonesia and how to get a permit properly, in accordance with applicable laws.

How to Setup a Construction Service Company?

set up a construction service company

Determine the Desired Type of Construction Service

Every successful business must start with a solid business plan. Your business plan does more than just embody your company’s vision. This helps you ensure that the fundamental ideas behind your company make sense, and can generate real income.

In Indonesia There are 3 (three) categories of activities covered by the type of construction service business according to Article 12 of Law no. 2 of 2017, i.e:

    • Construction Consulting services business;
    • Construction Work Business; and
    • Integrated construction work business.

Once you have determined the business you choose, you should look into the rules, licenses, and registrations required for your location of business. The construction industry requirements make starting a business a procedure that must be met. In Indonesia there are specific laws for construction service companies, which means you have to make sure you are fully aware of everything you need to do.

But here are some overall considerations to start with as a basis.

Registering Your Business

Registering a business entity is the first concrete step towards making your company a reality. There are several ways to register your construction company, or any other company for that matter. But the most common and immediate option is often to form a limited liability company and other types of business entities that are permitted under the regulations.

Sign up for a License

It is almost certain that your city requires construction companies to have special permits to work within their boundaries. Some may be as simple as being a recognized contractor within a city, county, or state.

Who can Setup a Construction Service Company?

According to Article 1 number 1 Law No. 18 of 1999 concerning Construction Services (Law on Construction Services), construction service providers are individuals or companies, whose business activities are to provide construction services. Furthermore, in the explanation of Article 1 figure 3 jo. point 4 of the Construction Services Law, it is explained that these agencies are:

Business entities that can take the form of legal entities, including:

    • Perseroan Terbatas (PT) – Local or PMA, and Koperasi , CV, Firma.
    • Not a business entity, either Indonesian or foreign, including government agencies and institutions.

What are The Types of Construction Companies (BUJK) in Indonesia?

In Indonesia, the regulation regarding construction services itself can be seen in Law Number 2 of 2017 concerning Construction Services and several derivative regulations.
Kindly refer the table below for the types of Construction Companies (BUJK) in Indonesia:

Swipe Table >>>

Types BUJKExplanationRegulationDefinitionIssued by
BUJK NasionalNational Construction Service Business Entity,
hereinafter referred to as National BUJK, is a
company or business entity in the form of PT,
KOPERASI, CV or FIRMA whose capital comes
100% from within the country.

Ownership of capital or shares of this company
can be owned by the Government of Indonesia,
Local Government, State Owned Enterprises
(BUMN), Regional Owned Enterprises (BUMD),
Domestic Investment Business Entities (PMDN),
National Private Non PMA / PMDN and / or
Indonesian citizens.

The National BUJK can be in the form of a legal
entity or not a legal entity consisting of Perseroan
Terbatas (PT), Koperasi,Perseroan Komanditer
(CV) or Firma.
UU 18/1999
PP 28/2000
PP 30/2000
PP 41/2000

Ministerial Regulation No. 04 / PRT / M / 2011
concerning Guidelines for Requirements for the
Granting of National Construction Services
Business Permits.
Permit to do business in the construction
service sector granted by the Regency / City
Government. (Article 1 Number 5)
Regency / City Government where the
BUJK is domiciled.
BUJK PMABUJK-PMA is a Business Entity in the form of a
Perseroan Terbatas (PT) which is established in
the framework of Foreign Investment or commonly
referred to as PT PMA.

A construction service company established in the
context of foreign investment (PMA) is a joint
venture between a foreign construction service
company (BUJK ASING) and a local construction
service company (BUJK Nasional) in the form of a
Perseroan Terbatas (PT) so it is commonly called
PT PMA or BUJK PMA.

The limit of foreign share ownership in a foreign
investment construction service business entity is
limited to a maximum of 67%.
UU 18/1999
PP 28/2000
PP 30/2000
Permenpu 24/2009

Ministerial Regulation No. 03 / PRT / M / 2016
concerning Technical Guidelines for Granting
Foreign Investment Construction Services
Business Permits.
Permit to do business granted by the Govern-
ment to BUJK PMA to carry out Construction
Service activities in Indonesia.
(Article 1 Number 8)
Investment Coordinating Board (BKPM)
BUJK / BUJKA
Representative
BUJK-ASING is a 100% foreign construction
service company that opens a representative
office for construction service companies in
Indonesia.

BUJKA is a 100% foreign construction service
company that is established under the laws of a
foreign country and is domiciled and has a head
office abroad that conducts business activities
in Indonesia by opening a Representative Office
of a Foreign Construction Service Company. This
company must have large qualifications and have
experience working on construction projects with
high risks, high costs and using modern
technology.
UU 18/1999
PP 28/2000
PP 30/2000

Permenpu 05/2011 & Ministerial Regulation
No. 10 / PRT / M / 2014 concerning Guidelines
for Requirements for the Issuance of Foreign
Construction Service Business Entity Represen-
tative Licenses.
IUJK for BUJKA is called a Representative
License. Representative Office License is a
license to conduct business that is given by
the Government to BUJKA to carry out
construction service activities in Indonesia.
(Article 1 Number 4)
Ministry of Public Works, in this case
signed on behalf of the Minister by the
Head of the Work Unit.

Furthermore, if the business entity wishes to engage in construction services, the business entity is required to undergo a certification process according to the classification and qualifications of its business, as stipulated in Article 8 PP No. 4/2010 concerning Amendment to PP. 28 of 2008 concerning Business and the Role of the Construction Service Community (PP No. 4/2010).

This certification is carried out by the Construction Services Development Agency (LPJK), or associations that have received accreditation from the National LPJK (Article 6 of LPJK Regulation No.11 of 2006 concerning Construction Implementation Service Business Registration).

Below is a list of documents that a construction service company must have.

SKA or SKT

SKA is a Work expertise certificate issued by a government agency called the Construction Services Development Agency (LPJK). SKA certificates are given to construction workers who have met the certification requirements based on their fields, expertise and disciplines.

SKA (Work Skills Certificate) can be a proof of ability and competence for someone in carrying out the profession as an expert, whether engaged in Consultant or Contractor Services. SKA is divided into three (3) qualification levels as follows:

1. Main Expert / Ahli Utama
2. Associate Expert / Ahli Madya
3. Young Experts / Ahli Muda

SKT (Work Skills Certificate) which can prove the ability and competence of the profession in the field of Construction Implementation Services. Unlike SKA, SKT usually refers to work experience and is mostly addressed to Contractors and Implementers. The SKT qualification levels are as follows:

1. Level I
2. Level II
3. Level III

KTA

Membership Card (KTA) of the Construction Company Association is a mandatory requirement for any construction company. If you want to apply for a construction service business permit (SIUJK). KTA issued by the construction company association is authentic proof that the business entity has become a member of the construction company association. And the association for building KTA issuers must be recognized and registered with the National LPJK.

SBU

In this certification process, a classification and qualification of the expertise of a business entity is carried out which is then stated in the Business Entity Certificate (SBU).

After obtaining an SBU, the company is then required to carry out a registration process at the LPJK. This is regulated in Article 12 of Government Regulation Number 28 of 2000 jo. Article 3 of the LPJK Regulation Number 11 of 2006. 

In addition to the above certification and registration, companies also need to obtain a Construction Services Business Permit (IUJK).

IUJK

This IUJK is issued by the Regency / City Government where the business entity is domiciled (Chapter II Article 1 of the Decree of the Minister of Settlements and Regional Infrastructure No. 369 / KPTS / M / 2001 concerning Guidelines for Granting National Construction Services Business Permits).

How Many Types of Qualifications are there in the Type of Construction Services Business in Indonesia?

Referring to the LPJK Regulation No.3 of 2017 concerning Certification and Registration of Construction Implementation Services Businesses, LPJK makes company qualifications with project values: K1, K2, K3, M1, M2, B1, and B2. Small Business Entity Qualification includes K1, K2, and K3 sub-qualifications, Medium Business Entity Qualification includes M1 and M2 sub-qualifications, and Large Business Entity Qualifications include B1 and B2 sub-qualifications. For National BUJK, SBU is awarded with the qualifications of large, medium, and small businesses. Meanwhile, BUJK PMA and BUJKA only have large qualifications. Then, how is it different?

Qualification

The qualification levels at the Contractor company are:

1. Minor qualifications (K1, K2, and K3)
2. Intermediate Qualifications (M1, M2)
3. Major Qualifications (B1 and B2)

Kindly refer the table below for more detail:

QualificationPaid Capital
Company
Work
Experience
ExpertsLimitation of
Value of One Job
KECIL 1 (K1)> IDR 50 Million to
IDR 500 Million
Not required1 SKT Level 3 Skilled
Personnel (Skills Cer-
tificate) PJT may
concurrently be a PJK
and / or PJBU
Max. IDR 300 Million
KECIL 2 (K2)> IDR 200 Million to
IDR 500 Million
Minimum IDR 1 Billion
cumulative over the last
10 years
1 SKT Level 3 Skilled
Personnel (Skills Cer-
tificate) PJT may
concurrently be a PJK
and / or PJBU
Max. IDR 1 Billion
KECIL 3 (K3)> IDR 350 Million to
IDR 500 Million
Minimum IDR 1,750 Billion
cumulative over the last
10 years
1 person SKT Level 1
(Skills Certificate)
PJT may concurrently
be a PJK and / or PJBU
Max. IDR 2,5 Billion
MENENGAH (M1)> IDR 500 MillionMinimum IDR 2.5 Billion
cumulative for 10 years
last or ever doing work a
maximum of IDR 833 Million
for the last 10 years
2 SKA Young Experts
(Ahli Muda)
Max. IDR 10 Billion
MENENGAH (M2)> Rp 2,5 BillionMinimum IDR 10 Billion
cumulative for 10 years
last or ever doing work
most M1 sub qualifiers
IDR 3,330 million for
the last 10 years
2 SKA Associate Experts
(Ahli Madya)
Max. IDR 50 Billion
BESAR 1 (B1)> IDR 10 BillionMinimum IDR 50 Billion
cumulative for 10 years last
or ever doing work the
highest sub qualification M2
IDR 16,660 Billion during
The last 10 years
1 SKA Associate Expert
(Ahli Madya) in accordance
with the field as PJT

1 SKA Associate Expert
(Ahli Madya) according to
the field as PJK

1 PJBU person
Max. IDR 250 Billion
BESAR 2 (B2)> Rp 50 MilyarMinimum IDR 250 Billion
cumulative over The last
10 years or have ever done
sub qualification job B1 at
a maximum of IDR 83.330
Billion during the last 10
years
1 SKA Associate Expert
(Ahli Madya) in accordance
with the field as PJT

1 SKA Associate Expert
(Ahli Madya) according to
the field as PJK

1 PJBU person
Max. infinite

Classification of Construction Implementing Services (Contractors)

Building Classification

CODE: Sub CLASSIFICATION

BG001 – Single Residential Building Construction Implementation Services & Couples
BG002 – Multi or Multiple Residential Building Construction Services
BG003 – Warehouse & Industrial Building Construction Services
BG004 – Commercial Building Construction Implementation Services
BG005 – Public Entertainment Building Construction Implementation Services
BG006 – Building Construction Services for Hotels, Restaurants, and Other Similar Buildings
BG007 – Educational Building Construction Implementation Services
BG008 – Health Building Construction Implementation Services
BG009 – Implementing Services for Other Building Construction

Civil Building Classification

CODE: Sub CLASSIFICATION
SI001 – Construction Services for Water Channels, Ports, Dams, and Other Water Resources Infrastructure
SI002 – Construction Services for Drinking Water and Wastewater Treatment Plants and Waste Management Buildings
SI003 – Highway Construction Implementation Services (except Flyovers), Roads, Railroads, and Airport Runways
SI004 – Bridge, Flyover, Tunnel and Subway Construction Services
SI005 – Construction Implementation Services for Long Distance Drinking Water Pipes
SI006 – Long Distance Wastewater Piping Construction Services
SI007 – Construction Services for Long Distance Oil and Gas Piping Construction
SI008 – Construction Services for Local Drinking Water Pipes
SI009 – Construction Services for Local Wastewater Pipes
SI010 – Construction Services for Local Oil and Gas Piping Construction
SI011 – Implementing Services for Stadium Building Workers for Outdoor Sports
SI012 – Building Construction Services for Indoor Sports Facilities and Recreation Facilities 

Classification of Mechanical ElectricaL Installation

CODE: Sub CLASSIFICATION
MK001 – Construction Executing Services Installation of Air Conditioning (Air Conditioner), Heating and Ventilation
MK002 – Construction Implementation Services for Water Pipe Installation (Plumbing) in Buildings and Channels
MK003 – Construction Implementation Services for Installing Gas Pipes in Buildings
MK004 – Insulation Construction Implementation Services in Buildings
MK005 – Construction Implementation Services for Installing Lifts and Walking Stairs
MK006 – Mining and Manufacturing Construction Services
MK007 – Construction Implementation Services for Thermal, Pressurized, Oil, Gas, Geothermal (Engineering Works)
MK008 – Construction Implementation Services for Transport & Lifting Equipment Installation
MK009 – Implementation Services for Production, Oil & Gas Storage Facilities Installation (Engineering Works)
EL001 – Construction Services for All Power Power Plant Installation
EL002 – Construction Implementation Services for Power Plant Installation with Maximum Power of 10 MW
EL003 – Construction Implementation Services for New & Renewable Energy Power Plants
EL004 – Construction Implementation Services for High Voltage / Extra High Voltage Electric Power Transmission Networks
EL005 – Telecommunication and / or telephone transmission network construction services
EL006 – Construction Services for Medium Voltage Electricity Distribution Networks
EL007 – Construction Services for Low Voltage Electricity Distribution Network Installation
EL008 – Construction Implementation Services for Telecommunication and / or Telephone Distribution Networks
EL009 – Construction Implementation Services Installation of Control and Instrumentation Systems
EL010 – Electrical Power Installation Construction Services for Buildings & Factories
EL011 – Other Electrical Installation Construction Services

Other Service Classification

CODE: Sub CLASSIFICATION
PL001 – Construction Equipment Rental and Building Demolition Services or Other Civil Works with Operators
PL002 – Executing Services for Prefabricated Construction Assembly and Installation for Building Construction
PL003 – Implementing Services for Assembly and Installation of Prefabricated Construction for Road and Bridge Construction and Railroads
PL004 – Implementing Services for Assembly and Installation of Prefabricated Instruction for Construction of Water Resources Infrastructure, Irrigation, Wharfs, Ports, Rivers and Clean Water, Waste and Garbage Buildings (Incinerator) 

Execution Specialist Classification

CODE: Sub CLASSIFICATION
SP001 – Field Investigation Work
SP002 – Demolition Works
SP003 – Work for Preparation and Land Development / Location
SP004 – Earthworks, Excavations and Stockpiles
SP005 – Field Preparation Works for Mining
SP006 – Scaffolding Works
SP007 – Foundation work, including erection
SP008 – Groundwater Well Drilling Work
SP009 – Roofing and Waterproofing Works
SP010 – Concrete Works
SP011 – Steel Work and Installation, including Welding
SP012 – Stone Laying Works
SP013 – Other Special Construction Work
SP014 – Asphalting Works with a Special Series of Equipment
SP015 – Landscape / Gardening Work
SP016 – Building Maintenance Work

Implementation Skill Classification

CODE: Sub CLASSIFICATION
KT001 – Glass Works and Window Glass Installation
KT002 – Plastering Works
KT003 – Painting Works
KT004 – Floor and Wall Ceramic Installation Work
KT005 – Other Floor Installation Work, Wall Covering and Wallpaper Installation
KT006 – Woodwork and / or Joining Wood with Other Materials
KT007 – Interior Decoration and Installation Works
KT008 – Ornament Installation Work
KT009 – Gypsum Installation Works
KT010 – Acoustic Platfon Installation Work (Acoustic Celling)
KT011 – Curtain Wall Installation

If you experience difficulties and ignorance in processing the Establishment of a Construction Services Business Legal Entity in Indonesia, related to the procedures and legal foundations that apply in Indonesia.

We are Indoservice, a company secretarial and licensing service consultant who can assist you in setting up a company in Indonesia and a trusted and experienced business-related license in Indonesia, committed to providing the best and fast service to meet your needs. Contact us now for special offers.

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