When a foreign construction company wants to perform business activities in Indonesia as a construction contractor or consultant, they will often establish a foreign construction representative office in Indonesia for that purpose. In Indonesia, a Foreign Construction Service Business Entity or Badan Usaha Jasa Konstruksi Asing (BUJKA) is a legal entity established abroad and has representative offices in Indonesia. BUJKA is considered equivalent to a PT PMA. A BUJKA can conduct construction projects in Indonesia but only in the form of joint operations with local companies. Then, only this joint operation is allowed to submit tender and carry out foreign-funded projects of government, private-funded projects, and projects under the Foreign Investment and Domestic Investment. In this guide, Cekindo provides the things you need to know to set up a foreign construction representative office BUJKA in Indonesia.
ESSENTIALS TO KNOW PRIOR TO ESTABLISHING A FOREIGN CONSTRUCTION REPRESENTATIVE OFFICE IN INDONESIA
Business License for BUJKA
A valid construction service license of the parent company is mandatory for the foreign construction representative office. The business license must be legalised by the foreign embassy in Indonesia.
Requirements: Classification and Qualification
The BUJKA is obliged to fulfill the classification and qualification requirements of Indonesian construction services business.
Directors and Commissioners of BUJKA
The BUJKA’s members of board of directors (BOD) and board of commissioners (BOC) should not be the members of the BOD and BOC of another BUJKA in Indonesia.
ESTABLISH A FOREIGN CONSTRUCTION REPRESENTATIVE OFFICE IN INDONESIA
Preparing Your Application
You must decide the location and building of your BUJKA office from the get-go. This is because your office address is required for your application. Not every address is valid. Your business address should be in a commercial building. Choose your business address carefully and properly as it will cost you a lot of money and time to change it in the future.
Process to Establish a Foreign Construction Representative Office in Indonesia
- The Legal Status
A foreign company must first acquire a letter of recommendation from the embassy of country of origin in Indonesia. The letter is to prove that the BUJKA is registered legally with good reputation.
- Domicile Letter of BUJKA
Once the company is proved with good legal status, you should then get a domicile letter for your BUJKA. The letter is issued by the local office, depending on where the BUJKA is located.
- Taxpayer ID (NPWP)
Then, get a taxpayer identification number or NPWP for the BUJKA from the Indonesian tax office.
- Certification and Registration
You will need the following documents as a foreign company to apply for a BUJKA license in Indonesia: Business Entity Certificate (SBU), Expertise Certificate (SKA), Registered member of the construction company’s association
- BUJKA License
According to the latest Indonesian Law, the foreign company of the BUJKA must acquire the License of Representative Office for Foreign Construction Services (IUJK) in order to establish a representative office in Indonesia. The validity of a IUJK license is three years, and it is extendable.
- Operations of BUJKA
Once the BUJKA have obtained the IUJK license, it is permitted to carry out operations such as construction services and engineering consulting activities. However, these projects must be in the form of joint operation mentioned earlier.
HOW CEKINDO CAN ASSIST
Still not sure if you should enter the Indonesian market by setting up a representative office for your construction company? Should you choose a construction PT PMA instead? Cekindo can help you decide. We have broad experience with many foreign companies and can advise you on an ideal strategy to deal with all setup requirements. Book a consultation with us now and discuss the future of your business in Indonesia.