The construction sector plays a significant role in driving Indonesia’s economic growth. This is reflected in the country’s Gross Domestic Product (GDP), which has reached 10.06% as of the third quarter of 2024. As the sector expands, it has also attracted foreign investors looking to tap into the Indonesian market by establishing foreign construction service businesses (BUJKA). However, setting up a BUJKA involves a series of legal steps and procedures that must be carefully followed. So, what does the legal process look like?
Indonesia’s construction service industry has grown rapidly, driven by the nation’s ongoing development initiatives. Infrastructure projects such as schools, business centers, government buildings, bridges, and roadways not only fuel the economy but also enhance the social and cultural life of the nation. As a result, the construction sector has become a key pillar in supporting the national economy.
The construction sector ranks as the fourth largest industry in Indonesia, following the processing industry, agriculture, and trade.
Infrastructure development also remains one of President Prabowo Subianto’s key focuses as part of his vision of “A Strong Indonesia towards the Golden Indonesia 2045,” supported by the 8 Asta Cita Missions, 17 Priority Programs, and 8 Quick Win Programs.
The Ministry of Public Works and Housing integrates the president’s vision by implementing the 16 Major PU Projects for 2025-2029. These projects include accelerating infrastructure development to support smart living in 10 metropolitan areas, infrastructure for food security, supporting industrial downstreaming, and developing infrastructure for the nation’s capital (IKN) and its surrounding areas.
Read also: Setting up a Construction Representative Office (BUJKA) with Bizindo
As Indonesia’s construction industry grows, it continues to attract both local and foreign players. Foreign construction service businesses (BUJKAs) play a critical role in expanding construction projects across the country. They contribute significantly to technology transfer, investments, and infrastructure development.
Want to establish a BUJKA office in Indonesia? Understanding the procedures and requirements is crucial to starting a construction business in Indonesia.
Indonesia has regulated the process of establishing a BUJKA through several laws and regulations, including:
- Government Regulation No. 5 of 2021 on Risk-Based Business Licensing (PP 5/2021).
- Minister of Public Works and Housing Regulation No. 09/PRT/M/2019 on Guidelines for Licensing Foreign Construction Service Businesses (Permen PUPR 09/PRT/M/2019).
What Is BUJKA in Indonesia?
For foreign construction companies wishing to operate in Indonesia, there are two main options: establishing a Foreign Construction Service Business (BUJKA) or a Foreign Investment Limited Liability Company (PT PMA).
A BUJKA is a representative office or entity for a foreign construction company operating in Indonesia. It is an alternative for foreign companies looking to expand their business into Indonesia without setting up a limited liability company (PT). BUJKAs can participate in construction tenders, provide consulting services, and oversee project execution.
Read also: IMF Ranks Indonesia as 8th Largest Economy, Outperforming France and the United Kingdom
However, BUJKAs are required to collaborate with local construction companies when working on projects in Indonesia. They must form a joint operation (KSO) with a local partner.
When it comes to marketing, BUJKAs may establish a representative office (KPPA) in Indonesia under the following conditions:
- The BUJKA’s representative office must be legally established in the foreign company’s home country.
- The highest position in the representative office must be held by an Indonesian citizen, responsible for technical oversight.
- The highest position responsible for construction execution and technology transfer may be held by a foreign national.
How to Establish a BUJKA in Indonesia?
Opening a BUJKA representative office in Indonesia requires fulfilling various requirements established by the government. The documents required include:
- Articles of incorporation of the company.
- Company Registration Certificate (TDP).
- Company Domicile Certificate.
- Business Entity Certificate (SBU) from the Business Entity Certification Institute (LSBU).
- Business Identification Number (NIB) issued via the OSS-RBA system.
- Standard Certification that demonstrates the company meets the required technical standards.
In addition, technical and administrative requirements include:
- Membership in a construction association in Indonesia.
- Providing identity documents and complete data of the company owners or managers.
- Submitting the company’s financial reports.
Why Should Foreign Companies Choose BUJKA?
BUJKA offers an ideal option for many foreign companies for several reasons:
- It allows for quicker entry into the Indonesian market without the need to establish a new legal entity.
- It enables handling large projects through partnerships with local companies.
- It doesn’t require a large investment like the establishment of a PT PMA.
- It offers more flexible licensing requirements compared to fully established companies.
However, BUJKA has its limitations, especially when it comes to project ownership. If your company wants to own projects independently without relying on a local partner, a PT PMA may be a better choice.
Need Help Establishing a BUJKA? Bizindo is Here to Assist!
Establishing a BUJKA in Indonesia requires a deep understanding of the applicable regulations. From obtaining permits and certifications to forming joint ventures with local companies, everything must be done correctly to avoid legal issues.
Bizindo has years of experience assisting foreign companies in establishing BUJKAs and PT PMAs in Indonesia. We provide comprehensive services, including business permit management, licensing, and opening bank accounts for your business operations.
Ready to enter the Indonesian construction market? Contact Bizindo now, and we’ll guide you through every step of the process quickly and efficiently!
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