License for National Business Entities as the Construction Services Provider

Background

According to Law Number 18 of 1999 on Construction Services, construction services is consultancy  services of construction work planning, services of construction work performance, and services of construction work supervision. Construction has a very important role in achieving various aims in order to support the objectives of national development. The construction services are carried out by the construction services provider, in the form of individuals or business entities, whereas such business entities are divided into 2 (two) classifications, that is, (i) national business entities; and (ii) foreign business entities. In order to perform the construction services, there are some requirements in order to obtain the business license of construction services that must be fulfilled by the business entities as the construction services provider (the “License”).

Regulations

There are some regulations that are related to the License for construction services provider in the form of national business entities (the “Business Entities”), such as:

  1. Law Number 18 of 1999 on Construction Services;
  2. Government Regulation Number 28 of 2000 on Business and Society of Construction Services Role (“PP 28/2000”) jo. Government Regulation Number 4 of 2010 on Amendment of PP 28/2000 (“PP 28/2000 jo. PP 4/2010”); and
  3. Decree of Minister of Habitation and Regional Infrastructure Number 369/KPTS/M/2001 on Guidelines of Licensing for National Construction Service Business (“Kepmen 369/2001”).

Licenses

Each Business Entities shall have the business License issued by the Regional Government where the Business Entities are located. The License shall be obtained by the Business Entities in order to perform or conduct the construction services in all regions of Republic of Indonesia. The License which has been given to the Business Entities is valid for 3 (three) years and can be extended. According to Article 14 of PP 28/2000 jo. PP 4/2010, the License will be given to the Business Entities, which have fulfilled the requirements, such as:

(i) Have the registration certificate of business entities issued by the Certification Unit  of Business Entities (the “Unit”) which is formed by the Agency of Construction Services Development (the “Agency”)

The registration means an activity in order to determine the competent of skill and expertise of the profession of the individuals or business entities; an activity in order to determine the business license in accordance with the classifications and qualifications which are embodied in the certificate issued by the Unit.

(ii) Completed the requirements provided by other prevailing laws and regulations related to the business activity.

The specific requirements in obtaining the License for the Business Entities are set out in Kepmen 369/2001. In order to obtain the License, the national business entities shall apply through certain form as stipulated in the attachment of Kepmen 369/2001 to the Regional Government, that is, Regent/Mayor or appointed Officer. The application shall be enclosed with:

(i) the copy of the business entities certificate that has been registered by the Unit;

(ii) the copy of the receipt of the application administration fee payment;

(iii) other administration requirements that is regulated by the Regional Government in accordance with the prevailing laws and regulations; and

(iv) each License will be given code number in accordance with the guidance of numbering of License as stipulated in the attachment of Kepmen 369/2001.

Other technical matters in relation to the granting of License are further stipulated by the Regional Government.

Sanction

In relation to the violation of License, the Regional Government Regulation shall stipulate the administration sanction in accordance with Article 35 paragraph 1 of PP 29/2000 jo. PP 4/2010, such as (i) written warning; (ii) suspension of business and/or profession license; (iii) revocation of business and/or profession license.

Helen Taurusia, SH


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License for National Business Entities as the Construction Services Provider
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