Established a Construction Services Company in Indonesia – Buildings are one of the most important basic human needs. Being part of clothing and food, shelter or buildings is a benchmark for whether a human being has a decent life or not. Currently, there are still many people, especially in big cities, who cannot meet the basic requirements of these three elements of human livability, so many end up without a permanent place to live.

In order to help people live better lives, now there are many companies that handle construction services. Good for the construction of houses, buildings and even roads. Based on the Negative Investment List (DNI), foreign companies can conditionally own construction companies. The company can be in the form of a consulting company, contractor, or both (integrated construction services). Companies that provide construction services can only own 67 and 70 percent of the shares (depending on whether they come from an ASEAN country or not).

The project value cannot be less than IDR 50 billion (~$3.71 million). If you want to open a construction consulting service, the project value must be more than IDR 10 billion (~ $743,605). Only small and medium local companies can set up a construction business with a project value less than the above figure.

Construction service companies, both building construction services and other construction services, have several indicators that show that the company has good quality construction work, so that it is able to provide maximum work results.

Constraction company establishment

The following are the steps for setting up a construction business in Indonesia:

1. Type of construction services business

Companies can provide consulting services, construction work, and/or integrated services. In addition, the type of business entity can be a construction business representative office or a PMA construction company.

2. Construction business classification

The classification in question is civil construction, building construction, electrical installations, or special construction, then also determine the sub-classification of the business to be carried out.

3. Have a local business partner

Due to ownership regulations, contractor business entities must establish companies with local residents. This structure is known as a PT-PMA, or joint venture company. To establish a company, you need at least two shareholders (one of whom is a foreign citizen). If the person lives in Indonesia, they will need a KITAS and NPWP (Taxpayer Identification Number).

The company has a minimum investment amount where 25% of the total investment is paid as initial capital. The process of establishing a company takes approximately 2 months through BKPM (Investment Coordinating Board).

Some requirements for establishing a company:

• Business and principal permits from BKPM
• Domicile letter
• Deed of Establishment of the company
• NIB (Business Identification Number)
• NPWP (Taxpayer Identification Number)

4. KTA (Construction association member identification card)

Based on the construction service category, having a KTA is mandatory. Here are some memberships:

• Gapeksi (Association of Indonesian National Construction Companies), if your service category is contractor
• Gapenri (Indonesian Association of National Design and Build Companies), if your service category is an integrated service (EPC)
• Inkindo (National Association of Indonesian Consultants), if your construction service category is construction consulting

5. Certification

As a construction company, it is mandatory to have an SBU (Business Entity Certificate) or business entity certificate which contains business classification and sub-classification data. SBU can be obtained from LPJKN (Construction Services Development Institute). Apart from that, professional workers, such as architects or engineers, also need a SKA (Certificate of Expertise)

6. Construction business license

Construction service companies must have a business license or IUJK (Construction Services Business Permit).

Construction Services Business License Requirements:

• Fill out the IUJK application form
•  Deed of establishment of a business entity (especially for applicants who have already formed a business entity)
• NIB and the original document must be shown
• List of commissioners and directors of construction services companies
• List of non-technical employees
• List of technical staff and the assignments
• List of equipment, supplies, and ownership of construction equipment
• Financial reporting for construction services company
• Work experience from the company
• 2 passport size 4×6 photographs for directors or branch heads or heads of construction service companies
• Office space and ownership certificate
• SBU and original documents must be shown
• NPWP
• KTP of construction service company management
• KTP of all non-technical personnel and technical personnel
• Engineering work experience letter
• Recommendations from the City Public Works Department where the construction service company is located
• Request for NKTT approval
• Engineering Diploma
• Proof of membership of the Individual Professional Association for construction services engineering personnel

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.

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