Starting a Construction Company in Indonesia: Know the Process

If you’re in the construction business and want to expand your services, Indonesia should be one of your best choices. The government earmarked a whopping $22.9 billion for its 2016 budget, the biggest ever since. Infrastructure development will also remain one of the main priorities of this administration until 2020. Under the recent Positive Investment List, foreign companies can own a construction company in Indonesia with conditions. It can be either a contractor company or consultancy service – or both, in which case it’s called an integrated construction service.

Those who offer construction implementation services can own only between 67 and 70 percent depending on whether you’re from an ASEAN country. Work value should also be no less than IDR 50 billion (~ $3.71 million). If you want to enter a construction consultancy service, your work value should be over IDR 10 billion (~ $743,605).

Only local small and medium enterprises (SMEs) can set up a construction business with less work value than these numbers.

Read more: Setting Up a Representative Foreign Construction Company (BJUKA) in Indonesia

Setting Up a Construction Company in Indonesia

Here are the steps to opening a construction business in Indonesia:

1. Decide what kind of construction service you want to offer 

As mentioned, it can be construction consultation, construction works, and/ or integrated services. In addition, you have to decide what kind of construction company you want to establish: a construction representative office or a construction PMA company

2. Know your classification

If you’re a contractor, it can be civil construction, building construction, electrical installation, or specialty construction. You also have to select your sub-classification.

3. Find a local partner

Due to the restrictions in ownership, you need to establish a company with the locals. This structure is then called PT-PMA, which is a joint venture company.

To form a company, you need at least two shareholders, one of whom is a foreigner. If he lives and works in Indonesia, he needs a work permit called KITAS and NPWP (tax ID). The company must also meet the paid-up capital requirement of IDR 10 billion. It may take about two months to process the incorporation through the BKPM (Indonesia Investment Coordinating Board).

Some of the requirements include:

• Business and principal license from BKPM
• Domicile letter
• Duly notarized establishment deed with articles of incorporation
• TDP (company registration certificate)
• NPWP (taxpayer registration)

Read more: How Construction Companies in Indonesia  should Prepare a Construction Agreement.

4. Obtain KTA (Construction Association Membership)

Based on your construction service category, obtaining your Construction Association membership from various construction associations is mandatory. Here are the various membership requirements:

– Gapeksi (Gabungan Perusahaan Konstruksi Nasional Indonesia) if your construction service category is a contractor

– Gapenri (Gabungan Perusahaan Nasional Rancang Bangun Indonesia) if your construction service category is integrated service (EPC)

– Inkindo (Ikatan Nasional Konsultan Indonesia) if your construction service category is construction consultation based on the process.

5. Obtain the necessary certificates

As a construction company, you should have SBU (Sertifikat Badan Usaha) or a business entity certificate indicating your classification and sub-classification. You can get it from LPJKN (Lembaga Pengembangan Jasa Konstruksi) or Construction Services Development Institute.

Suppose you’re a professional such as an architect or engineer. In that case, you should also apply for an expertise certificate called SKA (Sertifikat Keahlian Ahli), which you can get before the SBU.

To summarize, the complete steps for obtaining certificates are as follows:

1. SKA (Sertifikat Keterangan Ahli) –  Expertise Certificate
2. KTA (Kartu Tanda Anggota Asosiasi) – Construction Association Membership
3. SBU (Sertifikat Badan Usaha) – Legal Entity Certificate

6. Apply for a business license

Once you already have the SBU and other needed certificates, you can have your business license or IUJK (Izin Usaha Jasa Konstruksi).

Read more: Why Construction Business in Indonesia should Leverage Payroll Services

Set Up Your Construction Company in Indonesia Quickly with InCorp Indonesia

Setting up a construction business in the country can take as long as four months. However, we at InCorp are all about efficiency. We offer a wide range of services that make the entire process more efficient and cost-effective:

1. Gather, assess, and process many of your documents even while you’re still in the country of your origin. We also offer translation services, converting Indonesian documents to English and vice versa.
2. Provide you with a domicile letter for FREE. Take advantage of our shared offices and co-working spaces in Jakarta and Bali. We also have a virtual office in these key cities for a fraction of the cost of regular rent.
3. Help you set up a bank account, which is necessary to hold your paid-up capital and make foreign financial transactions easier.
4. Provide complete business outsourcing support, from market analysis and research to local partner selection and business licensing.
5. Process the appropriate visas and work permits.

We offer two more options to start your construction company in Indonesia as quickly as possible. These are shelf companies and representative offices (BUJKA). Our knowledgeable team is ready to guide you through setting these up, discuss the pros and cons of each, and help you choose the best option.

By removing challenges that increase the risk of mistakes, legal issues, and rejection and streamlining the process with our alternative options, setting up a construction service becomes hassle-free for you.

Let InCorp Indonesia (an Ascentium Company) help establish a construction company by bringing your construction business to Indonesia.