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MAJOR CHANGES IN CONSTRUCTION SECTOR UNDER OMNIBUS LAW AND ITS
IMPLEMENTING REGULATIONS
In November 2020, the Government of Republic of Indonesian has enacted Law No. 11 of 2020 on Job Creation
(“Omnibus Law”). The Omnibus Law amended previous laws and regulations with the main purpose of the
Omnibus Law is essentially to streamline the licensing requirements and ultimately attract more investment.
The further implement the Omnibus Law, the GOI has issued series of regulations in the form of Governement
Regulations, Presidential Regulations, and Ministry Regulations (“Implementing Regulations”).
Omnibus Law and Implementing Regulations introduce several changes to the previous laws and regulations in
the field of construction. We set out below a summary of the several major changes in the construction sector
introduced under the Omnibus Law and the Implementing Regulations;
No. Issues Previous laws and regulations Omnibus Law & Implementing
Regulations
1. Licensing Construction Limited Liability Company Construction Limited Liability Company
Requirement A company is required to be registered at IUJK is no longer required for the provision
the Online Single Submission system of construction service in Indonesia.
mantained by Investment Coordinating
Board (“OSS”) and obtain a Business The NIB will now serve as the business
Identification Number (Nomor Induk license for the construction company
Berusaha – “NIB”). engaging in construction services in
Indonesia.
In addition to the NIB, the company is
required to obtain business license in the However, in addition to the NIB,
form of an Indonesian Construction construction company will still be required
Business Lisence (Izin Usaha Jasa to obtain certification in the form of SBU as
Konstruksi - ‘IUJK”). The IUJK will only be the commercial license.
in effect once the company has obtained a
Business Entity Certificate (Sertifikat Badan For foreing investment company, the
Usaha – “SBU”). shareholding requirements such as foreign
shareholding limitation and minimum
For foreign investment company, the local criteria of local and foreign shareholders
and foreign shareholders are subject to are still applicable.
certain requirements such as foreign
shareholding limitation and minimum
criteria of local and foreign shareholders.
World Trade Center 3, level 27 Jl.Jend.Sudirman Kav.29-31,Jakarta Indonesia 12920
No. Issues Previous laws and regulations Omnibus Law & Implementing
Regulations
Licensing Foreign Construction Representative Foreign Construction Representative
Requirement Office Office
A foreign entity can engage in construction Like a construction company, BUJKA will be
service in Indonesia by forming a Foreign required to obtain NIB as its business
Construction Representative Office (Badan license and obtain certification in the form
Usaha Jasa Konstruksi Asing – “BUJKA”). of an SBU as its commercial license.
Registration of a BUJKA is done through The requirement for BUJKA to form a joint
OSS system. operation as regulated under the previous
laws and regulations is still applicable.
Once the BUJKA is registered at the OSS
system, the BUJKA is required to apply for
NIB.
In addition to the NIB, the BUJKA is
required to obtain business license in the
form of IUJK. The IUJK will only be in effect
once the BUJKA has obtained the SBU.
In engaging construction service in
Indonesia, BUJKA is required to form a joint
operation with a qualified local construction
company.
2. Requirement The SBU is classified into small, medium Same as regulated under the previous laws
for SBU and large scale which will be determined and regulations, under the Omnibus Law
based on the following: and the Implementing Regulations, SBU
are still classified in small, medium and
a. net asset requirements; large scale. However, the basis for
b. experience requirements; and determining the scale of the SBU is
c. engineers/manpower requirements. different compared to the previous laws
and regulations.
Detailed requirements was provided under
Construction Services Development Under Omnibus Law and its Implementing
Agency (Lembaga Pengembangan Jasa Regulations, the scale of the SBU will be
Konstruksi – “LPJK”) regulations. determined based on the following:
a. annual sales;
b. financial ability;
c. availability of construction experts; and
d. the ability to provide construction
equipment.
To date, the LPJK regulations on the
detailed required for SBUs has not been
issued.
World Trade Center 3, level 27 Jl.Jend.Sudirman Kav.29-31,Jakarta Indonesia 12920
No. Issues Previous laws and regulations Omnibus Law & Implementing
Regulations
3. Authority on The LPJK has the authority to issue SBU. The SBU is now to be issued by a
the Issuance Certification Agency (Lembaga Sertifikasi
of SBU Badan Usaha – “LSBU”).
LSBU must obtaina certification from LPJK
in order it to be able to certifiy and issue
SBUs.
Note LPJK is currently still in the process of
accrediting LSBU. Therefore, during the
transition period until LSBU has been
accredited by LPJK, SBUs are still
isssued by LPJK.
4. Authority All construction activity fall under the Construction activity in the field of electricity
on the authority of Ministry of Public Works and is now under the authority of Ministry of
issuance of Housing (“MPWH”) and is required to Energy and Mineral Resources (“MEMR”)
certifications obtain IUJK and SBU. and is no longer under the authority of
for MPWH.
construction Consequently, the licenses required to
activity in engage in the construction activity in the
the field of field of electricity will be subject to MEMR’s
electricty regulation.
The business licenses required to engage
in construction activity in the field of
electricity are NIB and SBU issued by the
certification agency accredited by MEMR
(“Electricity SBU”).
Further, under the Omnibus Law and
Implementing Regulation, foreign
construction entity who intends to engage
in the construction activity in the field of
electricity by forming a Foreign Supporting
Electricity Service Provider Representative
Office (Badan Usaha Jasa Penunjang
Usaha Tenaga Listrik Asing – “BUJPTLA”).
BUJPTLA is a new type of representative
office introduced under the Omnibus Law
and in general is similar to BUJKA and also
subject to similar requirements of BUJKA
(ie requirement to form a joint operation
etc).
The main difference is that BUJPTLA is
under the authority of MEMR and is
required to obtain Electricy SBU.
World Trade Center 3, level 27 Jl.Jend.Sudirman Kav.29-31,Jakarta Indonesia 12920
Lawyers in charge
Dirgantara Adi Nugroho
Partner
Adi is one of the newest Partner at Guido Hidayanto &
Partners specializing in infrastructure and construction
projects. Prior to joining Guido Hidayanto & Partners, he
worked for top tier firm in Indonesia as a senior associate.
He has acted for both Indonesian and foreign clients in a
variety of projects and commercial transactions His
experience includes representing foreign sponsors in the
development of ultra super critical electric power plants in
Indonesia including the preparation and negotitations of the
project documents (for example EPC and O&M contracts,
coal supply agreements).
Adi was also extensively involved in various EPC projects for
construction of commercial buildings, factories and smelters.
E-Mail dirgantara.adi@lawghp.com
Michelle Viandy Huang
Associate
E-Mail michelle.huang@lawghp.com
World Trade Center 3, level 27 Jl.Jend.Sudirman Kav.29-31,Jakarta Indonesia 12920
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