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In January 2017, the House of Representatives approved Law No. 2 of 2017 regarding Construction Services (“Construction Law”), which became effective as of January 12, 2017. Pursuant to the Construction Law, construction services shall be classified as follows:
Construction Services
The BUJKA license will be issued by the Ministry of Public Works (“MPW”). Additional regulations concerning the procedure for the acquisition of a BUJKA license, the cooperation with the local project partner and the hiring of domestic employees are also determined by the Ministry of Public Works.
Pursuant to the Construction Law, basically every joint venture with foreign shareholding (PT PMA) has to comply with all prevailing laws and regulations. The so-called “big qualification” (see above) as well as the existence of all required business licenses are equally basis prerequisites for the PT PMA.
The Construction Law also obliges both, BUJKA and PT PMA, to obtain a Certificate of Business Entity (“SBU”). For this purpose, a registration at the MPW through a state-approved association is required.
The following administrative sanctions will be imposed on BUJKA and PT PMA for specific violations of the Construction Law:
Administrative Sanctions
Executing construction services in Indonesia without having established either a BUJKA or a PT PMA
Upon the entry into force of the new Construction Law, the Law No. 18 of 1999 concerning construction services (the “Old Law”) has been repealed. The implementing regulations of the Old Law not contravening the new Construction Law will remain in force. The implementing regulations of the new Construction Law are to be adopted by January 12, 2019.
updated 4 July 2017
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