Home Blog Update on Licensing Procedures for National Construction Service Businesses in Indonesia Business Licenses | Business Setup Update on Licensing Procedures for National Construction Service Businesses in Indonesia InCorp Editorial Team 14 October 2019 4 minutes reading time Table of Contents Scope of Regulation 8/2019 Types of Licenses Obtaining TDUP Obtaining IUJK Implementing Licenses How Cekindo can Help 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: Types of licenses Obtaining Construction Service Business Licenses IUJK (Izin Usaha Jasa Konstruksi) Obtaining Individual Registration Certificates TDUP (Tanda Daftar Usaha Perseorangan) Implementing Licenses 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. Read Full Bio Verified by Daris Salam COO Indonesia at InCorp Indonesia With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships. Frequently Asked Questions Is having audited accounts mandatory? Audited financial statements are required for: Entities gathering funds from the public (e.g., banks, insurance companies) Entities issuing debt instruments Publicly listed companies State-owned enterprises Companies with assets and/or turnover exceeding IDR 50 billion Entities mandated by legislation Can a PMA company keep non-Rupiah bookkeeping and use a language other than Indonesian? For tax purposes in Indonesia, companies must maintain their books in Rupiah, using the Indonesian language, and store them within the country. Exceptions for using USD and English in bookkeeping require prior notification to the authorities and any use of languages other than Indonesian needs approval from the Ministry of Finance. Can investors own shares with preferential rights? Under Indonesian Company Law, shareholders can hold shares with various preferential rights, such as voting rights, nomination rights for board members, priority dividend or liquidation proceeds, and options for conversion or withdrawal after a set period. Are there investment facilities provided for foreign investors in Indonesia? 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.