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).
This article will clarify the process of setting up a representative office for a foreign construction company in Indonesia.
What is a BUJKA?
Badan Usaha Jasa Konstruksi Asing or BUJKA is a type of a representative office that foreign construction firms can establish in Indonesia. Therefore, one of the prerequisites of setting up a BUJKA is to have an existing construction company outside of Indonesia.
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.
Representative offices are not equal to limited liability companies. However, many foreign companies opt 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.
Differences between a BUJKA and a PT PMA
|Type of legal entity||Representative office||Limited liability company|
|Maximum allowed foreign ownership for construction companies||100% foreign-owned||67% for non-ASEAN, |
70% for ASEAN investors
|Local involvement||Joint operation with a local construction company is required when the project is being delivered||Local shareholder is required (either silent or active) to be a National Construction Service company with a minimum classification of B1. |
Straits Partners can assist with finding such shareholder
|Minimum capital requirement||No minimum capital requirement||IDR 50 billion (~USD 3.7 million) net equity for PT PMA in construction service with B2 classification |
(find more information about minimum capital in Indonesia here)
|Allowed activities||Contact companies and institutions and also collect information about available construction projects in Indonesia |
Participate in tenders, hire employees (local and foreign)
Apply for a limited stay permit for its foreign executives
Open a bank account
Work on construction projects together with a local construction company without acquiring a construction license
|Can be involved in construction projects with a value of more than IDR 50 billion (~USD 3,7 mln) |
Deliver construction projects in Indonesia without cooperating with any local companies
|Estimated time of establishment||2 months||4 months|
Have a look at our previous article for more detailed information about setting up a construction company in Indonesia.
Requirements for a BUJKA in Indonesia
Despite having fewer requirements than limited liability companies, BUJKAs still have some preconditions they need to comply with, as per Regulation No. 5 of 2011 of Minister of Public Works:
Have joint operation with a 100% Indonesian-owned construction company when delivering projects
Classified as ‘large-scale’
Only involved in complex, high-risk, and/or highly technical construction projects
Joint operation with a local construction company
Note that one of the main prerequisites of delivering construction projects in Indonesia is that a BUJKA must have a local construction company as their partner. In other words, they can carry out construction projects only through joint operations with a local PT.
However, BUJKAs are allowed to participate in biddings already before they have a local partner for that project. Furthermore, BUJKAs can have separate partners for different projects whereas construction PT PMAs can only have one as they are considered a joint venture.
Both BUJKA and its local partner will have the same liability regarding the construction.
How to set up a construction company representative office in Indonesia
The process of setting up a representative office for your construction company in Indonesia is divided into three main stages:
#1 Obtain preliminary licenses
In order to be able to start with the BUJKA registration process, you must first get a preliminary permit which consists of 3 sub-licenses:
|Membership of Indonesian Contractors Association |
(Kartu Tanda Anggota/KTA)
|Proof of being an officially approved entity, issued by an association in relations to the applied classification|
|Certificate of Expertise |
(Sertifikat Keahlian /SKA)
|BUJKA applicant should provide either a local or foreign expertise as per classification applied and proceed the certification |
Straits Partners can provide as per classification of works registered for the BUJKA
|Certificate of Business in Constructions |
(Sertifikat Badan Usah/SBU)
|Confirmation of your classification and subclassification|
The total processing time of preliminary licenses can be up to 3 months. With Straits Partners, however, it will take up to 3 weeks.
#2 Set up a BUJKA
After you have obtained all the required initial licenses you can proceed with registering your BUJKA:
Pay the government a fee of US$ 10,000 for construction service companies or US$ 5,000 for construction consulting companies
Obtain BUJKA license from the BKPM (Investment Coordinating Board)
Get a Domicile Letter from the local subdistrict
Business Registry (TDP)
The total time of setting up a BUJKA is up to 1 month. Also, note that a BUJKA license is valid for three years and can be extended after that.
#3 Acquire work and stay permit KITAS
The last step of BUJKA registration is acquiring a limited stay permit (KITAS) for a foreign Chief Representative Officer. The process of obtaining work and stay permits in Indonesia roughly takes 1 month.
However, there is a new regulation coming which requires the CRO of a BUJKA to be an Indonesian citizen. If you do not have such person, Straits Partners can also provide a nominee Chief Representative Officer.
Where to start?
If you are not sure whether to enter Indonesia by setting up a representative office for your construction company or choose a limited liability construction company instead, book a consultation by filling in the form below.
Feel free to reach out to us at [email protected]