There are three (3) types of representative office in Indonesia based on Article 21 Regulation of Head of Investment Coordinating Board (Badan Koordinasi Penanaman Modal/BKPM) Number 15 of 2015 Concerning Guideline and Procedure for Licensing and Non-Licensing Investment (“BKPM Regulation No.15/2015”) as follows:
- Representative Office of Foreign Company (KPPA);
- Representative Office of Foreign Trade Company (KP3A); and
- Representative Office of Foreign Construction Services Enterprises (BUJKA).
Foreign investors aiming to expand their construction business to Indonesia have two options – set up a limited liability company (PT PMA) or a representative office for their foreign construction company (BUJKA).
Reason to choose BUJKA ?
Representative offices are not equal to limited liability companies. However, many foreign companies choose for a BUJKA instead of setting up a limited liability construction company (PT PMA) in Indonesia mainly because it does not require any local shareholders.
Once a BUJKA is set up, it can participate in tenders and collect information about construction projects all over Indonesia. Even though you don’t need to have local shareholders when setting up a BUJKA, you are required to have a local construction company as your partner by the time the project is being delivered.
Therefore, a BUJKA is best suitable for larger foreign construction companies since they are only allowed to engage in large-scale construction projects while small size projects are reserved for local construction companies.
Differences BUJKA Vs PT PMA :
Both entities are eligible to do business and receive income in Indonesia. The main difference in terms of doing business is that due to BUJKA is not eligible to obtain business license for construction service, hence the entity can not perform any construction work without signing a Joint-Operation Agreement with a local company that has the licenses. While a PT PMA is eligible to do the construction work in Indonesia without any involvement of local company.
License to obtain (BUJKA Vs PT PMA):
License for PT PMA:
- Principle License form BKPM
- Notarial Deeds of Establishment / Article of Association
- Approval Letter from Ministry Justice and Human Rights
- Domicile Letter from Regional Government Office
- Corporate Tax ID / NPWP
- Company Registration Certificate (TDP)
- SKA / Expert Certificate from LPJK (Indonesia Construction Development Board)
- ISO Certificate (depending on membership requirements)
- Membership Certificate from National Construction Association
- SBU / Company Registration Certificate from LPJK
- Business License for Construction Service issued by BKPM
License for BUJKA:
- SKA / Expert Certificate from LPJK
- Membership Certificate from National Construction Association
- SBU / Company Registration Certificate from LPJK
- BUJKA license from BKPM
- Domicile Letter from Regional Government Office
- Corporate Tax ID / NPWP
- Company Registration Certificate (TDP)
BUJKA Project Qualifications :
We understand that BUJKA is only allowed to undertake the construction works which are high risks, high-tech, and high cost, as follows:
- HIGH-RISK CONSTRUCTION WORK, means doing construction work that could endanger public safety, property, human life, and the environment;
- HIGH-TECH CONSTRUCTION WORK, means doing construction work that must use special construction method, high-tech equipment, construction equipment and require many special expert;
- HIGH COST CONSTRUCTION WORK, means doing construction work that the value of project at least Rp 100,000,000,000 (one hundred billion rupiah), and conduction construction services work (planning and/or supervision) at least Rp 10,000,000,000 (ten billion rupiah).
Engaging in a Join Operation Project:
According to Article 11 of the Regulation of the Minister of Public of Works and Housing Republic Indonesia Number 10/Prt/M/2014 (“Regulation Ministry of PU No. 10/2014”), we understand that BUJKA must cooperate with the Local Construction Company (Badan Usaha Jasa Konstruksi Nasional or BUJKN) for doing construction work.
However, only BUJKN who meet the following criteria can engage with the BUJKA:
- Type of BUJKN business entity is Limited Liability Company;
- Share ownership 100% (one hundred percent) by Indonesian citizen, local governments, private enterprises, state enterprise and/or local government;
- Own SBU with huge business qualifications; and
- Own Construction License (Izin Usaha Jasa Konstruksi/IUJK).
Beside required by law, the other benefit of BUJKA when join operation with BUJKN is the financial support in term of:
- State Budget or Budget Revenue and Expenditure;
- Loan;
- Foreign grants;
- Foreign investment and domestic; and/or
- Private funds in accordance with the law and regulations.
Get a Quote to BUJKA Services in Indonesia
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