“The Indonesian government updated the business licensing process through GR 5/2021 on Risk-Based Business Licensing, regulating the construction services sector via the OSS RBA system. This update nullifies the previous CL 22/2019 provisions. In response, the Ministry of Public Works and Public Housing issued CL 21/2021, detailing procedures for fulfilling business licensing requirements, construction work competency certification, and the enforcement of business entity and competency certificates.”
The government of Republic Indonesia has updated the business licensing process through GR 5/2021 on Risk-Based Business Licensing, provides more specific regulations regarding business licensing to support business activities in the construction services subsector, which specifically regulates business licensing in the construction services sector through the Online Single Submission Risk-Based Approach (“OSS RBA”). This update renders the previous provisions under CL 22/2019 no longer applicable due to the implementation of the OSS RBA system. Furthermore, to optimize the use of the OSS RBA, the Ministry of Public Works and Public Housing issued Circular Letter Number: 21/SE/M/2021 (“CL 21/2021”) concerning Procedures for Fulfilling Business Licensing Requirements, Implementation of Construction Work Competency Certification, and the Enforcement of Business Entity Certificates and Construction Work Competency Certificates.
Scope of Licensing Services under GR 5/2021
GR 5/2021, through Articles 84 (4), (5), (8), and (9), states that BUJKA representative offices must be legal entities in their home countries. BUJKA and Foreign Investment Construction Enterprises (“BUJK PMA”) must meet large qualification standards for construction services business entities. The highest leader of a BUJKA office must be an Indonesian citizen serving as the technical manager, though an exception is allowed for foreign nationals in cases of technology transfer.
Under Article 84 of GR 5/2021, the term BUJKA refers only to foreign representative offices, while construction enterprises with foreign ownership are referred to as BUJK PMA. This provision clearly distinguishes the licensing process for both BUJKA and BUJK PMA in Indonesia.
As construction services fall under the public works and housing sector with medium-high risk activities, both BUJKA and BUJK PMA must have a (“NIB”) and a standard certificate (“SS”) as required by Article 14 (1) of GR 5/2021. Moreover, SS for business licensing in the construction services subsector is regulated under Article 99 of GR 5/2021, which states:
“The Standard Certificate for Business Licensing in the construction services subsector includes:
- Construction Business License (SBU);
- Construction Work Competency Certification (SKK);
- licenses.”
Business Licensing under CL 21/2021
The CL 21/2021 regulates the fulfillment of business licensing requirements for BUJKA PMA and BUJKA. The business licensing requirements include obtaining an NIB and a SS. The process for fulfilling these requirements is as follows:
- NIB Application Process
The NIB application is submitted through the OSS RBA system. - SBU Application Process
- The SBU application is submitted by fulfilling the PB UMKU requirements on the OSS RBA system, which is connected to the Integrated Construction Services Information System (SIJK).
- Certification data and required documents include:
- Annual sales data
- Financial capability data
- Availability of construction workers
- Ability to provide construction equipment
- Quality management system implementation data
- Anti-bribery management system implementation data
- Certification assessment is conducted by the Business Entity Certification Institution (LSBU) and the registration process by LSBU.
- LPJK assigns numbers and records SBU in the Integrated SIJK system.
- SIJK sends SBU data to OSS RBA.
- The applicant receives the PB UMKU document in the form of SBU from the OSS RBA system.
- Uploading SBU on OSS RBA
The SBU is uploaded to the OSS RBA system as a fulfillment of the Standard Certificate. - Verification and Approval
The Standard Certificate is verified and approved on the OSS RBA system by the Access Rights Holder. - Payment of Non-Tax State Revenue (PNBP)
PNBP is paid as issued by the OSS RBA. - Issuance of NIB and Standard Certificate
The OSS RBA issues the NIB and Standard Certificate.
In summary, CL 21/2021 details the process for obtaining business licenses for BUJK PMA and BUJKA, including a NIB and SS. Applications are submitted through the OSS RBA system, with required documentation and certification assessed by LSBU. After verification and payment of PNBP, the NIB and SS are issued through the OSS RBA.
Author: Yohana Veronica Tanjung, Kristalia Andiani Puteri, and and Al Fatih Abdan Syakuro
Gaffar & Co., Indonesian Boutique Law Firm which specializing and focus on commercial law areas e.g. Investment Regulatory.
For further queries and information, contact us:
+62 21 5080 6536 | info@gaffarcolaw.com | www.gaffarcolaw.com
