paparan_PUPR_2021low#2

THE MINISTRY OF PUBLIC WORKS AND HOUSING EASE OF DOING CONSTRUCTION BUSINESS IN INDONESIA UNDER A NEW OMNIBUS LAW

PREFACE ENTRY TO CONSTRUCTION BUSINESS GETTING CONSTRUCTION PARTNERS HANDLING CONSTRUCTION PROJECTS CONCLUDING REMARKS

PREFACE GDP Overview GDP Construction Sector

GDP DISTRIBUTION (CURRENT PRICES) 2020 GDP Distribution 36% The value of Gross Domestic (Current Prices) 6% Product (GDP) in Indonesia has 10% increased from year to year. 2020 13% The Construction Sector 15% contributes 10% of the overall 20% GDP value in 2020. Mining & excavation Construction Wholetrade and retail sale; Car and motorcycle repair Agriculture, forestry, and fishery Source: Central Bureau of Statistics, 2020

CONSTRUCTION SECTOR GROWTH TO GDP (BILLION Rp) 14,000 forecasting 12,000 11,484,22 10,000 8,982.52 9,434,61 9,912.93 10,425.85 10,949.04 10,722.44 11,891.26 12.298.30 8,000 12.705.34 6,000 13,112.38 4,000 2,000 8,564.87 0 826.62 879.16 925.04 987.92 1,048.08 1,108.43 1,072.23 1,166.62 2014 1,213.71 1,260.81 1,307.91 1,355.00 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Construction Gross Domestic Product Source: Central Bureau of Statistics, 2020 Due to Pandemic Covid-19, Construction Growth in 2020 decreased several millions. But, the GDP value of the construction sector is predicted to return and continue to increase in 2021 to 2025.

Currently, under the latest Law of the Republic of Indonesia Number 11 of 2020 on Job Creation (Omnibus Law) and implementing regulations in construction sector, investors are given several conveniences to invest in the construction business in Indonesia. For an Overview, this booklet contains: 01 02 02 How to enter a How to get How to handle construction business construction construction projects or (a brief overview of partners investment in how to get into construction construction business projects investment in in Indonesia Indonesia under a new Omnibus Law)

CONSTRUCTION BUSINESS INVESTMENT REGULATION UNDER LAW OF THE REPUBLIC OF INDONESIA NUMBER 11 OF 2020 Ease of business licensing Application for Business Elimination of Construction Licensing includes Business Entity Services Business Permits Certification, Construction Work Competency Certification, and Business Identification Number (NIB) through Online Single Submission (OSS) BUJK Permits (National & Foreign BUJK supervision is Foreign) through Indonesian directly under the authority of Government (OSS), and verification of commitment the MPWH fulfillment by the MPWH Source: https://binakonstruksi.pu.go.id/informasi-terkini/sekretariat-direktorat-jenderal/dukung-peningkatan-kualitas-sektor-jasa-konstruksi-ke menterian-pupr-sosalisasikan-peraturan-pelaksana-uu-cipta-kerja-bidang-jasa-konstruksi/

CONSTRUCTION BUSINESS INVESTMENT REGULATION AFTER LAW OF THE REPUBLIC OF INDONESIA NUMBER 11 OF 2020 Integration Construction Data Realizing quality infrastructure Services make more efficient, more transparent and more through the implementation of accountable Sustainable Construction, implementation of SMKK, and compliance with K4 standards The supply chain of construction Elimination of dividend income services, testing of material tax for foreign and domestic resources and construction tax-payers. equipment, the use of domestic products, and all material resources and construction equipment are recorded in an integrated system; Source: https://binakonstruksi.pu.go.id/informasi-terkini/sekretariat-direktorat-jenderal/dukung-peningkatan-kualitas-sektor-jasa-konstruksi-kementerian- pupr-sosalisasikan-peraturan-pelaksana-uu-cipta-kerja-bidang-jasa-konstruksi/; Job Creation (Omnibus Law) Booklet, Coordinating Ministry for Economic Affairs 2021.

ENTRY TO Starting Construction Business CONSTRUCTION Equalization Foreign Engineers BUSINESS

7 Days ±15-23 Days START Determine business Register OSS and Business Payment Business Entity Capability Publishing Business Entity END activities and qualification Registration Number & Feasibility Assesments Certificates � Statement letter of Administration fee for � Annual Sales Large Qualification commitment fulfillment new foreign construction • Financial capability service business license • Engineers/construction QUALIFICATION � Name of foreign COMPANY company USD 10.000 workers availability • Supply capability of � Foreign company address construction equipment � Data of Representative Office in Indonesia ASSESMENT POINTS � Type of product produced � Product Capacity � Total manpower � Investment planning REQUIREMENTS Source: Ministry of Public Works and Housing (MPWH), 2021

View obligations VIEW OBLIGATION OF NEW VIEW OBLIGATION OF for investors CONSTRUCTION REPRESENTATIVE OFFICE COMPANIES BY INVESTORS FOR INVESTOR • Establish Indonesian legal entity • Establish company with large company through asset cooperation qualifications of National Construction with large qualifications of National Business Entity; Construction Service Business Entity; • Placing Indonesian citizens as leaders • Comply the capital structure provisions or directors; and investors technical criteria. • Establish cooperation with National Construction Business Entity and comply the Cooperation Technical Criteria; • Prioritizing the application of local technology and construction material; • Own high and update technology, with keep sustainable, and local wisdom; • Transfer knowledge and technology; • Employ more Indonesian workers; • Employ Indonesian workers in the management and technical fields as assistant of foreign workers (based on the appropriate scientific classification)

RECOGNITION FOREIGN ENGINEERS Recognition of the competence of foreign construction workers carried out through: Mutual recognition arrangement scheme; and Submit applications to the National Construction Services Agency through the Integrated Construction Services Information System (SIJK).

RECOGNITION FOREIGN ENGINEERS COMPETENCY Application 02 Engineering 04 Registration for Competency 05 Competency Test Equalization (portofolio verification) 01 Data 03 Result Verification DATA ENTRY DATA ENTRY FOR VERIFICATION ENGINEERING COMPETENCY TEST Engineers Identity: Application letter of Writing test, practical/ field Personal Data, Citizenship, Equalization program, Copy of observation, and or Passport Number, employer foreign workers employment interview company data, the number plan, Copy of limited stay visa approval of foreign workers and permit, copy of education employment plan, job position based on plan, construction diploma, copy of work works data, assistant data, also experiences, copy of technology and knowledge competency certificate, copy of passport, photograph, Assistant transfer activities Letter Aplication, Stamped Statement of Data Validity

GETTING Construction Workers CONSTRUCTION Construction Business Entities PARTNERS Specialist Organization Construction Material Production

CONSTRUCTION WORKFORCES IN INDONESIA 2021 Construction Engineers 2021 JUNIOR SENIOR SUPER Construction Workforces SENIOR 110.699 146.040 • Total Certified Engineers in 14.913 Indonesia is 271.652 people • Total Construction Skilled Workers Construction Skilled Workers 2021 in 2021 is 722.562 people. GRADE 3 GRADE 2 GRADE 1 229.226 94.385 398.951 Source: Central Bureau of Statistics, 2020

CONTRUCTION BUSINESS ENTITIES CONSTRUCTION BUSSINESS ENTITIES IN INDONESIA 2019 (Large Qualification) General Contractors Specialist Contractors Consultant Architectures & Engineering 1.519 32 390 Source: National Construction Services Agency, December 2019 CONTRACTORS LARGE CONSULTANT ARCHITECTURES & LISTED COMPANY QUALIFICATION ENGINEERING LARGE QUALIFICATION • PT. Adhi Karya (Persero), Tbk • PT. Wijaya Karya • PT. Virama Karya • PT. Brantas Abipraya (Persero) • PT. Adhi Karya • PT. Indra Karya • PT. PP (Persero), Tbk • PT. Waskita Karya • PT. Yodya Karya • PT. Hutama Karya (Persero) • PT. Hutama Karya • PT. Sarana Karya • PT. Total Bangun Persada (Persero), Tbk • PT. Nindya Karya • PT. Amarta Karya • PT. Waskita Karya (Persero), Tbk • PT. Brantas Abipraya • PT. Sucofindo • PT. Wijaya Karya (Persero), Tbk • PT. Pembangunan Perumahan (PP) • PT. Supraharmonia Consultindo • PT. Acset Indonusa, Tbk • PT. Istaka Karya • PT. Indokoei International • PT. Jaya Konstruksi, Tbk • PT. Totalindo Eka Persada • PT. Rider Levett Bucknall • PT. Nindya Karya (Persero) • PT. Indah Karya • PT. Archetype C&C Indonesia

ACCREDITED BUSINESS & PROFESSIONAL ASSOCIATION IN CONSTRUCTION Accredited Business Association In Construction Professional Association in Construction • INKINDO (National Association of Indonesian • HAKI (Indonesian Construction Experts Association) Consultants) • IAKI (Indonesian Construction Experts Association) • HATTI (Association of Indonesian Soil Engineers) • AKTI (Indonesian Integrated Contractors Association) • ATAKSI (Association of All Indonesian Construction • GAPENSI (Indonesian National Construction Experts) Implementer Association) • ISI (Indonesian Surveyors Association) • ASKONAS (National Contractors Association) • INTAKINDO (National Association of Indonesian • AKI (Indonesian Contractors Association) • ASPEKNAS (Association of National Construction Consultant Experts) • ASTTATINDO (Association of Indonesian Expert and Contractors) • ASPEKINDO (Indonesian Construction Entrepreneurs Skilled Engineers) • ATAKNAS (National Association of Construction Experts) Association) • IAI (Indonesian Institute of Architects) • AABI (Indonesian Asphalt and Concrete Association) • A2K4 – Indonesia (Indonesian Construction K3 Expert • GAPENRI (Indonesian National Design and Build Association) Company Association) • ASDAMKINDO (Indonesian Construction Human • GAPEKSINDO (Indonesian National Construction Resources Association) Company Association) • IAMPI (Indonesian Association of Project Management • PERKINDO (Indonesian Consultant Association) • GAPEKNAS (National Guard of Builders) Experts) • IAPPI (Association of Precast and Prestressing Experts) Source: Ministry of Public Works and Housing Decree Number 1410/KPTS/M/2020

ACCREDITED BUSINESS & PROFESSIONAL ASSOCIATION IN CONSTRUCTION Professional Association in Construction Construction Supply Chain Association • PERTAPIN (Association of Indonesian Professional • AP3I (Indonesian Association of Precast and Prestressed Experts) Companies • GATENSI (National Association of Engineers) • HATSINDO (Association of Indonesian Construction Engineers) • PETAKINDO (Association of Indonesian Experts and Skilled Workers) • ASTEKINDO (Indonesian Construction Engineer Association) • ATAKI (Association of Indonesian Construction Experts) • HPJI (Indonesian Road Development Association) • KNIBB (Indonesian National Committee for Large DAM’s) • ASTTI (Indonesian Technical Workers Association) • HATHI (Indonesian Association of Hydraulic Engineers) • IAP (Indonesian of Association Urban and Regional Planners) • GATAKI (Indonesian Construction Experts and Skilled Association) Source: Ministry of Public Works and Housing Decree Number 1410/KPTS/M/2020

PRODUCTION OF DOMESTIC CONSTRUCTION MATERIAL 2021 Material Production Amount Of Producer Business Entity In Business Entity Of Indonesia Foreign Investment Cement 13 11 2 110.301.480 ton 1 1 0 16 16 0 Oil Asphalt 162 133 29 695.718 ton 20 19 1 33 30 3 Buton Island Asphalt 932.700 ton Construction Steel 27.886.127 ton Lightweight Steel 3.749.400 ton Precast & Prestressed Concrete 35.927.178 ton Source: MPWH Construction Materials and Equipment Information System, 2021

HANDLING CONSTRUCTION PROJECTS

CATEGORIES OF INDONESIAN NATIONAL STANDARDS (INS) Indonesian INS for General INS for Highway, INS for Water INS for Human National Standard Construction Toll road and Resources Settlement, (SNI) in Bridges Building, and construction 494 Infrastructure Housing sector 192 154 315 Source: MPWH Independent Intensive Learning Information System, List of INS in Construction Sector

Government Construction Building Safety National Institution to Support Safety Commission Construction Infrastructure Commitee Services Agency Development (1/2) Road, Bridge, DAM and Tunnel Safety Safety Commitee

Government 34 37 Toll Road Institution to Support Management Infrastructure National Road River Basin Development (1/2) Implementation Management Agency Organizations Agency 7 34 MPWH Engineering Regional Regional Agency for Road Construction Construction Material, Sabo, Service Agency Procurements DAM, Swamp, and Coastal) Agency

CONSTRUCTION TECHNOLOGY DEVELOPED IN INDONESIA Green Building Pre- Modular Building Information fabricated/ Construction Modelling Pre-cast Material

POTENTIAL NATIONAL STRATEGIC PROJECTS Bridges Highways Flats 38.328 m 2.500 Km 51.340 Unit Flyover/Underpass Special Houses 31.053 m Roads 10.000 Unit 3.000 Km Self-help Houses 813.660 Unit PSU Houses 262.345 Unit DAM Indonesia New Infrastructure Capital City 61 unit Infrastructures

CONCLUDING REMARKS

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