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 Negative Investment List, foreign companies can own a construction company in Indonesia with conditions. It can be either contractor or consultancy service – or both, in which case it’s called integrated construction service.

Those who offer construction implementation service can own only between 67 and 70 percent depending if you’re from an ASEAN country or not. Work value should also be no less than IDR 50 billion (~ $3.71 million). If you want to enter into 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 a work value less than these numbers.

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: construction representative office or 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 is living and working in Indonesia, he needs a work permit called KITAS and NPWP (tax ID). The company also has to meet the minimum capital, of which 25 percent should be paid up capital. It may take about two months to process the incorporation through the BKPM (Indonesia Investment Coordinating Board).

Some of the requirements include:

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

4. Obtain KTA (Construction Association Membership)

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

– Gapeksi (Gabungan Perusahaan Konstruksi Nasional Indonesia) if your construction service category is 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, which shall indicate your classification and sub-classification. You can get it from LPJKN (Lembaga Pengembangan Jasa Konstruksi) or Construction Services Development Institute.

If you’re a professional such as an architect or any kind of engineer, 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 now have your business license or IUJK (Izin Usaha Jasa Konstruksi).

Set Up Your Construction Company in Indonesia Quickly with Cekindo

It can take as long as four months to set up a construction business in the country. However, we at Cekindo 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 office 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.

Cekindo also offers 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 the entire process of 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, as well as streamlining the process with our alternative options, setting up a construction service becomes hassle-free for you.

Let Cekindo help bring your construction business to Indonesia by establishing a construction company.