licensing for construction companies in indonesia

Update on Licensing Procedures for National Construction Service Businesses in Indonesia

  • InCorp Editorial Team
  • 14 October 2019
  • 4 minutes reading time

Effective from June 13, 2019, the Minister of Public Works and Public Housing has enforced Regulation No. 08/PRT/M/2019 (or Regulation 8/2019) on Guidelines for National Construction Service Business Licensing Services. This regulation is enacted for the purpose to fulfill the requirements for standardised business licensing for construction companies in Indonesia.

Regulation 8/2019 has replaced the previous Regulation No. 04/PRT/M/2011 (Regulation 4/2011) on Requirement Guidelines for the Granting of National Construction Service Business Licenses.

Scope of Regulation 8/2019

Regulation 8/2019 addresses licensing regulations for construction service sector, especially at the regional level. This regulation covers the following items:

  1. Types of licenses
  2. Obtaining Construction Service Business Licenses IUJK (Izin Usaha Jasa Konstruksi)
  3. Obtaining Individual Registration Certificates TDUP (Tanda Daftar Usaha Perseorangan)
  4. Implementing Licenses

construction companies in indonesia

Types of Licenses

For the construction service sector in Indonesia, there are two types of applicable license: TDUP and IUJK. Both licenses have to be issued by relevant authorities through the Online Single Submission (OSS) system.

TDUP
This license is given to individuals, covering the construction service operations.

IUJK
This license is released to National Construction Service Enterprises BUJKN (Badan Usaha Jasa Konstruksi Nasional), covering the construction service operations as well.

Holders of TDUP or IUJK are able to participate in the following activities:

  • Construction works
  • Construction consultation
  • Integrated construction works (applicable for IUJK holders only)

Obtaining TDUP

By possessing a TDUP under the new regulation, TDUP will remain valid permanently for Indonesian individuals, as long as the registered services for TDUP are in operation. The following lays out the process of securing a TDUP:

1. Individuals must register via the OSS system to secure the NIB or Business Identification Numbers.

2. TDUP will only be issued when individuals upload the following items:

  • Names and KBLI codes (Indonesia Standard Industrial Classification Codes)
  • TDUP commitment statement

 

3. TDUP commitment must be fulfilled within 30 working days once the TDUP is issued through OSS.

  • For construction consultation, minimum level 8 expert work competence qualification certificates are required
  • For construction works, minimum level 5 technician work competence qualification certificates are required

 

4. Individuals submit all commitment documents. Then, these documents will be verified and validated by DPM PTSP (Investment Units and One-Stop Integrated Service) within five working days.

5. TDUP is only effective when it passes verification and validation, issued by OSS with the approval from DPM PTSP.

Obtaining IUJK

BUJKN that obtains the new IUJK will have a IUJK validity that lasts for as long as the operation is active, instead of the previous three-year validity with the extensions. The process is shown below:

1. The person in charge or PJBU (Penanggung Jawab Badan Usaha) must register via the OSS system to secure the NIB or Business Identification Numbers.

2. IUJK will only be issued when the following items are uploaded:

  • Names and KBLI codes
  • IUJK commitment statement

 

3. IUJK commitment, which is to possess the Enterprise Certificates (SBU), must be fulfilled within 30 working days once the IUJK is issued through OSS.

4. PJBU should submit all commitment documents. Then, these documents will be verified and validated by DPM PTSP within five working days.

IUJK is only effective when it passes verification and validation, issued by OSS with the approval from DPM PTSP.

Implementing Licenses

It is compulsory for TDUP and IUJK holders to perform the following activities during their construction service operations.

Holders of TDUP

  • Submit business activity reports annually
  • Operate a minimum of one construction service project within the valid period of the competence certificates

 

Holders of IUJK

  • Members of BOC and BOD, PJBU and Technical PJBU of BUJKN, should not hold similar positions in other construction service companies in Indonesia. Evidence must be shown on affidavits
  • Submit business activity reports annually
  • Organise construction services according to BUJKN market segments and related qualifications
  • Operate a minimum of one construction service project within the three-year valid period of SBU
  • Employ construction employees with competence certificates

How Cekindo can Help

Cekindo helps entrepreneurs and international businesses to set up construction companies and other companies as well in Indonesia. Our team of professional consultants and legal specialists can also assist you in applying for relevant business licenses in Indonesia.

Talk to our experts now and we will guide you further. Fill in the form below or visit one of our offices in Jakarta, Bali and Semarang.

Verified by

Hotdo Nauli

Senior Legal & Delivery Manager at InCorp Indonesia

Hotdo heads the Legal and Delivery team at InCorp Indonesia, managing Product Registration, Legal Advisory, and Business Licensing. With over 8 years of experience, she focuses on compliance and integrity, ensuring all client operations align with Indonesian laws and regulatory standards, including contract reviews and sector-specific licenses. She is also a licensed advocate and a member of the Indonesian Advocates Association (PERADI). 

Frequently Asked Questions

    According to Presidential Regulation No. 10/2021 and the amended version, all businesses are open for domestic and foreign investment with these limitations and classifications:

    • Eight businesses are closed to foreign investment and may be operated by the central government.
    • Designated business sectors or joint ventures with cooperatives (koperasi) and micro, small, and medium enterprises
    • Open businesses are subject to specific conditions, such as those that are exclusively available to 100% local investors, those with restricted foreign shareholding, and investments requiring special licenses

    Certain sectors are closed to foreign investment, including narcotics cultivation, gambling, and environmental conservation activities.

    A newly established PMA company in Indonesia is typically provided with import facilities, tax holidays, tax allowances, or investment allowances.

    • Import facilities
      Investors in Indonesia, particularly in manufacturing, may benefit from import tax exemptions for capital goods and raw materials through the Master List Facility. The imported goods must meet specific criteria, such as not being produced locally or not meeting industry demand despite local production.
    • Tax holiday
      The government offers CIT reductions of 50% or 100% for 5–20 years for listed pioneer industries, based on investment value. After this period, a CIT reduction of 25% or 50% applies for two fiscal years. Non-listed sectors can also apply by meeting criteria demonstrating pioneer industry status.
    • Pioneer industries are industries that have a wide range of connections, provide additional value and high externalities, introduce new technologies, and have strategic value for the national economy.

    • Tax allowance
      For companies in certain designated areas or regions, the government may provide the following tax concessions:
      Net income reduction up to 30% of the amount invested, prorated at 5% annually for six years, on condition that the assets invested are retained for the same duration.
      Accelerated depreciation and/or amortisation deductions
      An extension of tax losses carried forward for a maximum of ten years
      A 10% (or lower if treaty relief is available) withholding tax rate on dividends paid to non-residents
      The applicant eligible has to meet high-level-criteria for the above tax facilities:
      High investment value or for export purposes
      High manpower absorption
      High level of local content
    • Investment allowance
      The government offers a reduction in net income of up to 60% of the investment, distributed at 5% annually over six years of commercial production, contingent upon the retention of invested assets for the same duration. To qualify, applicants must meet business line eligibility criteria and employ a minimum of 300 Indonesian workers in the project.
    • Super deduction
      This facility could be granted to certain businesses, such as:
      60% reduction in net income of the amount of tangible fixed assets invested for labor-intensive industries, distributed throughout a certain time frame.
      Up to 200% reduction in the gross income of the amount spent for human resources development in certain competency activities.
      Up to 300% reduction in gross income of the amount spent for certain R&D activities in Indonesia.

    A PMA company in Indonesia must obtain an NIB, which also functions as:

    • Importer Identification Number (Angka Pengenal Impor or API)
      Producer Importer Identification Number (Angka Pengenal Impor Produsen or API-P), which is required for the import of machinery and equipment, goods, and materials used in production.
      General Importer Identification Number (Angka Pengenal Impor Umum or API-U), which is required for the import of specific goods for trading purposes, is grouped under one section in the Customs Classification System.
    • Customs Identification Number (Nomor Identitas Kepabeanan or NIK), It functions as an identifying document for the applicable Customs and Excise authorities during the customs clearance process.

    Some goods may face limitations or restrictions on importation in Indonesia, potentially requiring additional approval from the Ministry of Trade. Recommendations from technical ministries like Industry or Agriculture may influence these approvals.

    In Indonesia, the licensing system has been updated with the implementation of the Omnibus Law. Businesses are categorized into four risk levels based on the PMA company classification. Licensing requirements vary accordingly, with three main types:

    • Business Identification Number (NIB)
    • Low-risk businesses needing only an NIB

    • Standard Certification
    • Standard Certification is necessary for medium-low and medium-high-risk businesses
    • Licenses/Permits

    High-risk businesses require licenses/permits
    Additionally, basic requirements, including business location, must be met. Many licensing processes are facilitated through the Online Single Submission (OSS) platform managed by the Investment Coordinating Board (BKPM).

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The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind. We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials. We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website.