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An Update of Regulations on Foreign Construction Services Enterprises (BUJKA)

“The Ministry of Public Works and Public Housing has finally addressed the concerns of BUJKA Enterprises in Indonesia by revoking Regulation No. 09/PRT/M/2019 and issuing Circular Letter No. 22/SE/M/2019. As of November 2019, the provisions on BUJKA has been restored to its previous state which is acceptable to all parties.”

In June 2019, Ministry of Public Works and Public Housing (Menteri Pekerjaan Umum dan Perumahan Rakyat or “Menpupera”) promulgated Menpupera Regulation No. 09/PRT/M/2019 concerning Guidelines of Licensing Services for Foreign Construction Services Enterprises (“Regulation 9/2019”) set forth significant modifications of provisions on BUJKA, especially regarding the requirements of foreign investors.

However, within five months later Menpupera revoked Regulation 9/2019 by issuing Menpupera Regulation No. 17/PRT/M/2019 in November 2019 and issued a Circular Letter No. 22/SE/M/2019 of 2019 concerning Guidelines of Licensing Services for Foreign Construction Services Enterprises (“CL 22/2019”) for being the solution to the legal vacuum following the revocation of Regulation 9/2019 which regulates the technical procedure of obtaining business licenses of BUJKA, namely RO License and PMA License.

Scope of Licensing Services under CL 22/2019
For both licenses, CL 22/2019 renounces one type of licensing services, namely data alteration. CL 22/2019 only stipulates (i) new issuance of RO License/PMA License, (ii) revocation of RO License/PMA License based on application, and (iii) extension of RO License. However, CL 22/2019 does not deviate from Regulation 9/2019 in terms of the proposing party and the procedure of such licenses.

Either RO License or PMA License must be proposed by the Person in Charge of the Business Entity (Penanggung Jawab Badan Usaha or “PJBU”). For BUJKA RO, Article 33 (1) e of UUJK stipulates that the PJBU of BUJKA RO as the highest position in the organization must be an Indonesian citizen.

CL 22/2019 stipulates the procedure of new issuance and extension similarly with Regulation 9/2019, which shall be done in the following manner:

  1. registration to obtain Business Identification Number (Nomor Izin Berusaha or “NIB”) through Online Single Submission System (“OSS”);
  2. issuance of business license based on commitment (inactive);
  3. fulfilment of commitment within 30 (thirty) business days after issuance of business license (proved by possession of Business Entity Certificate (Sertifikat Badan Usaha / SBU ) with large qualification);
  4. verification and validation of fulfilment of commitments by the Menpupera’s Technical Team within 5 (five) business days after submission of complete documents of commitments.

After the due procedure, the RO License or PMA License shall be deemed effective by OSS and delivered through a notification. Similar to Regulation 9/2019, CL 22/2019 stipulates that RO License is valid for 3 (three) years, whereas PMA License is valid for as long as the BUJK PMA operates its business activities.

For revocation of RO License or PMA License, CL 22/2019 is congruent with Regulation 9/2019 as well. Such application must be submitted through OSS comprising the data of at least:

a. name of enterprise;
b. NIB;
c. recordation of the decision on the deletion of taxpayer identification number (Nomor Pokok Wajib Pajak or NPWP) or fiscal statement; and
d. statement letter of fulfilment of the obligations of:
1) taxation;
2) debt payment; and
3) commitment in the implementation of RO License/PMA License including the settlement of payment of administrative sanctions fine.

Subsequently, Menpupera shall verify and validate the commitment within 5 (five) calendar days after submission of the completed documents. Revocation of RO License/PMA License shall be delivered through OSS after issuance of the result by Menpupera.

Modified Provisions under CL 22/2019
Generally, CL 22/2019 does not modify the provisions on either license of BUJKA. This is due to the limitation of CL 22/2019, which does not contain any material requirements for either type of BUJKA. However, it still contains marginal differences in procedural matters.

CL 22/2019 renounces data alteration. Furthermore, CL 22/2019 renounces the specific requirement for the extension of RO License, which is a result of an evaluation that states the RO License can be extended. Therefore, CL 22/2019 brings notable efficiency to the licensing process.

CL 22/2019 also resolves the issue of discordance between the technical criteria of foreign investor stipulated in Regulation 9/2019 and Perka BKPM 6/2018. For PMA License, the commitment required by CL 22/2019 is limited to possession of SBU with large qualification. This means that BUJK PMA is reenabled to be owned by a BUJKN and an individual of a foreign citizen, as opposed to being exclusively owned by BUJKN and BUJKA with large qualification.

Conclusively, CL 22/2019 has restored the provisions on BUJKA to the condition that is acceptable to all parties. Any more specific regulations on which shall be stipulated by omnibus law which should be promulgated soon this year.

Author: Yohana Veronica Tanjung & Kristalia Andiani Puteri

Gaffar & Co., Indonesian Boutique Law Firm which specializing and focus on commercial law areas e.g. Investment Regulatory.

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