Upload
vanliem
View
218
Download
0
Embed Size (px)
Citation preview
DOING BUSINESS IN INDONESIA | 1
A Construction Perspective
DOING BUSINESS IN
Construction Industry Development Board Malaysia (CIDB) Level 10, Menara Dato’ Onn
No. 45, Jalan Tun Ismail 50480 Kuala Lumpur
Tel: +603 4047 7000 Fax: +603 4047 7070
Email: [email protected]
DOING BUSINESS IN INDONESIA | 2
FFoorreewwoorrdd
The contents of this document serves as a guide and
are current as at December 2013. The information in
this guide is meant for the purposes of reference. This
document does not purport to be professional
advice, nor a complete or comprehensive study on
the subject. It is recommended that professional
advice be sought before taking any action pursuant
to any matter contained in this document. The
material used in the preparation of this document
has been obtained from various sources, but is not
endorsed by Construction Industry Development
Board Malaysia as to accuracy, authenticity or
completeness. No warranty, express or implied, is
being made or will be made Construction Industry
Development Board Malaysia as regards the
accuracy or adequacy of the information
contained in this document. Due care has been
taken in the preparation of this document, but
because of the possibility of human and mechanical
error, no liability is assumed for the correctness of
any of the information contained herein the
Construction Industry Development Board Malaysia
assumes no liability for the interpretation and/or use
of the information contained herein. This document
has been prepared with the cooperation and
assistance of Master Builders Association Malaysia
(MBAM).
Doing Business in Indonesia: A Construction Perspective is a copy reserved of the Construction Industry Development Board Malaysia (CIDB). All Rights Reserved. No part of this publication maybe reproduced, stored in a retrieval system, transmitted by any means, electronic, mechanical, photocopying, recording or otherwise in any form or by any means whatsoever without the prior consent of the Construction Industry Development Board Malaysia (CIDB). Construction Industry Development Board Malaysia (CIDB) Level 10, Menara Dato’ Onn No. 45, Jalan Tun Ismail 50480 Kuala Lumpur Tel: +603 4047 7000 Fax: +603 4047 7070 Email: [email protected]
DOING BUSINESS IN INDONESIA | 3
CCOONNTTEENNTTSS Doing Business in INDONESIA A Construction Perspective
Map of Indonesia 5
Malaysia & Indonesia : At A Glance 6
1 Introduction 10
2 Background on Indonesia 12
2.1 The Country 12
2.2 General Economic Development and Status 13
2.3 Construction Industry Development 15
3 Essential Information For Doing Business in Indonesia 22
3.1 Method 22
3.1.1 How to Establish a Business Entity 22
3.1.2 Construction Practices 25
3.1.3 Law & Related Construction Law 32
3.1.4 Taxation 35
3.2 Money 42
3.2.1 Banking System 42
DOING BUSINESS IN INDONESIA | 4
3.2.2 Method of Payment 44
3.2.3 Cost of Doing Business in Indonesia 45
3.2.4 Project Financing 46
3.3 Manpower 52
3.3.1 Labor Resources 52
3.3.2 Wages Rates 53
3.4 Materials 56
3.4.1 List of major building materials suppliers and
their contact address 56
3.5 Machinery 61
3.5.1 List of building materials suppliers and their
contact address 62
4 Potential Business Opportunities 65
4.1 Listing of some potential projects opportunities 65
4.2 Networking channels 67
5 List of Top 15 Contractors in Indonesia for Joint Venture Possibilities
69
6 List of Local Associations/Construction Bodies/Construction Related Agencies or Ministries in Indonesia
84
7 Challenges and Issues Faced by Malaysian Contractors in Indonesia
96
8 Strengths, Weaknesses, Opportunities, Threats (SWOT) Analysis
100
DOING BUSINESS IN INDONESIA | 5
MMaapp ooff IINNDDOONNEESSIIAA
DOING BUSINESS IN INDONESIA | 6
IINNDDOONNEESSIIAA && MMAALLAAYYSSIIAA:: AATT AA GGLLAANNCCEE
Malaysia Indonesia
Area: 329,847 sq km 1,904,569 sq km
Population: 29,628,392 (July 2013 est.) 251,160,124 (July 2013 est.)
Urban
population:
72.8% of total population
(2011)
50.7% of total population
(2011)
Rate of
Urbanization:
2.49% annual rate of change
(2010-15 est.)
2.45% annual rate of change
(2010-15 est.)
Major Urban
Areas -
Population:
KUALA LUMPUR (capital) 1.493
million; Klang 1.071 million;
Johor Bahru 958,000 (2009)
JAKARTA (capital) 9.121
million; Surabaya 2.509 million;
Bandung 2.412 million; Medan
2.131 million; Semarang 1.296
million (2009)
Capital: Kuala Lumpur Jakarta
Administrative
Divisions:
13 states (negeri-negeri,
singular - negeri);
Johor, Kedah, Kelantan,
Melaka, Negeri Sembilan,
Pahang, Perak, Perlis, Pulau
Pinang, Sabah, Sarawak,
Selangor, Terengganu; and 1
federal territory (Wilayah
Persekutuan) with 3
31 provinces (provinsi-provinsi,
singular - provinsi), 1
autonomous province*, 1
special region** (daerah-
daerah istimewa, singular -
daerah istimewa), and 1
national capital district***
(daerah khusus ibukota);
Aceh*, Bali, Banten, Bengkulu,
DOING BUSINESS IN INDONESIA | 7
components, Kuala Lumpur,
Labuan, and Putrajaya
Gorontalo, Jakarta Raya***,
Jambi, Jawa Barat (West
Java), Jawa Tengah (Central
Java), Jawa Timur (East Java),
Kalimantan Barat (West
Kalimantan), Kalimantan
Selatan (South Kalimantan),
Kalimantan Utara (North
Kalimantan), Kalimantan
Tengah (Central Kalimantan),
Kalimantan Timur (East
Kalimantan), Kepulauan
Bangka Belitung (Bangka
Belitung Islands), Kepulauan
Riau (Riau Islands), Lampung,
Maluku, Maluku Utara (North
Maluku), Nusa Tenggara Barat
(West Nusa Tenggara), Nusa
Tenggara Timur (East Nusa
Tenggara), Papua, Papua
Barat (West Papua), Riau,
Sulawesi Barat (West
Sulawesi), Sulawesi Selatan
(South Sulawesi), Sulawesi
Tengah (Central Sulawesi),
Sulawesi Tenggara (Southeast
Sulawesi), Sulawesi Utara
(North Sulawesi), Sumatera
Barat (West Sumatra),
DOING BUSINESS IN INDONESIA | 8
Sumatera Selatan (South
Sumatra), Sumatera Utara
(North Sumatra), Yogyakarta
GDP
(Purchasing
Power Parity):
US$506.7 billion (2012 est.) US$1.237 trillion (2012 est.)
GDP - Real
Growth Rate:
5.6% (2012 est.) 6.2% (2012 est.)
GDP - Per
Capita (PPP):
US$17,200 (2012 est.) US$5,100 (2012 est.)
Labor Force: 12.9 million (2012 est.) 118.1 million (2012 est.)
Unemployment
Rate:
3% (2012 est.) 6.1% (2012 est.)
Revenues: US$67.31 billion US$164 billion
Expenditures: US$80.89 billion (2012 est.) US$180.9 billion (2012 est.)
Inflation Rate
(Consumer
Prices):
1.7% (2012 est.) 4.3% (2012 est.)
DOING BUSINESS IN INDONESIA | 9
EASE OF DOING BUSINESS RANKING
Malaysia Indonesia
Ease of Doing Business Rank 6 120
Starting a Business 3 23
Dealing with Construction Permits 8 16
Getting Electricity 5 17
Registering Property 6 15
Getting Credit 1 14
Protecting Investors 3 8
Paying Taxes 7 24
Trading Across Borders 3 8
Enforcing Contracts 5 19
Resolving Insolvency 4 18
DOING BUSINESS IN INDONESIA | 10
1. INTRODUCTION
The Republic of Indonesia is the largest archipelago in the world comprising
17,508 large and small tropical islands fringed with white sandy beaches,
many still uninhabited and a number even still unnamed. Straddling the
equator, situated between the continents of Asia and Australia and
between the Pacific and the Indian Oceans, it is as wide as the United
States from San Francisco to New York, equaling the distance between
London and Moscow. Indonesia has a total population of more than 251
million people from more than 200 ethnic groups. The national language is
Bahasa Indonesia.
Among the most well-known islands are Sumatra, Java, Bali, Kalimantan
(formerly Borneo), Sulawesi (formerly Celebes), the Maluku Islands (or better
known as Moluccas, the original Spice Islands) and Papua. Then, there is
Bali “the world’s best island resort” with its enchanting culture, beaches,
dynamic dances and music. But Indonesia still has many unexplored islands
with grand mountain views, green rainforests to trek through, rolling waves
to surf and deep blue pristine seas to dive in where one can swim with
dugongs, dolphins and large mantarays.
Because of her location, and geology, Indonesia is blessed with the most
diverse landscape, from fertile ricelands on Java and Bali to the luxuriant
rainforests of Sumatra, Kalimantan and Sulawesi, to the savannah
grasslands of the Nusatenggara islands to snow-capped peaks of West
Papua.
DOING BUSINESS IN INDONESIA | 11
Her wildlife ranges from the prehistoric giant Komodo lizard to the Orang
Utan and the Java rhino, to the Sulawesi anoa dwarf buffalos, to birds with
exquisite plumage like the cockatoo and the bird of paradise. This is also
the habitat of the Rafflesia the world’s largest flower, wild orchids, an
amazing variety of spices, and aromatic hardwood and a large variety of
fruit trees. Underwater, scientists have found in North Sulawesi the prehistoric
coelacanth fish, a “living fossil” fish, predating the dinosaurs living some 400
million years ago, while whales migrate yearly through these waters from
the South Pole. Here are hundreds of species of colourful coral and tropical
fish to admire.
Culturally, Indonesia fascinates with her rich diversity of ancient temples,
music, ranging from the traditional to modern pop, dances, rituals and
ways of life, changing from island to island, from region to region. Yet
everywhere the visitor feels welcomed with that warm, gracious innate
friendliness of the Indonesian people that is not easily forgotten.
Facilities-wise Indonesia’s hotels are second to none. In fact, many of its
luxurious and unique hotels have constantly been listed as some of the best
in the world, located on white sandy beaches, overlooking green river
valleys, or situated in the heart of busy capital Jakarta. While Indonesia’s
cities like Jakarta, Bandung, Surabaya, or Makassar are a hive of activities
for business and leisure and a paradise for shoppers, offering upscale
boutiques selling top brand names, to local goods at road-side stalls. Here
gourmets can treat themselves to the many regions’ delectable spicy
cuisine or dine sumptuously at international restaurants. And for sheer
relaxation, Indonesia Spas are second to none to reinvigorate both body
and mind.
DOING BUSINESS IN INDONESIA | 12
Convention centres are equipped with state-of-the-art facilities, as many
top international conferences and exhibitions are held in Jakarta, Bali to
Manado, ranging from the Global Climate Change Conference in Bali to
the World Ocean Conference in Manado, to trade and investment
exhibitions and tourism trade shows in many provincial capital cities.
Jakarta, Bali, Medan, Padang, Bandung, Solo, Yogyakarta, Surabaya,
Makassar are connected by direct international flights, and many regular
and low cost carriers fly passengers to Indonesia’s towns or remote
locations.
2. BACKGROUND
2.1 The Country
The Dutch began to colonize Indonesia in the early 17th century; Japan
occupied the islands from 1942 to 1945. Indonesia declared its
independence shortly before Japan's surrender, but it required four years of
sometimes brutal fighting, intermittent negotiations, and UN mediation
before the Netherlands agreed to transfer sovereignty in 1949. A period of
sometimes unruly parliamentary democracy ended in 1957 when President
SOEKARNO declared martial law and instituted "Guided Democracy." After
an abortive coup in 1965 by alleged communist sympathizers, SOEKARNO
was gradually eased from power. From 1967 until 1988, President SUHARTO
ruled Indonesia with his "New Order" government. After rioting toppled
Suharto in 1998, free and fair legislative elections took place in 1999.
Indonesia is now the world's third most populous democracy, the world's
largest archipelagic state, and the world's largest Muslim-majority nation.
DOING BUSINESS IN INDONESIA | 13
The government made economic advances under the first administration
of President YUDHOYONO (2004-09), introducing significant reforms in the
financial sector, including tax and customs reforms, the use of Treasury bills,
and capital market development and supervision. During the global
financial crisis, Indonesia outperformed its regional neighbours and joined
China and India as the only G20 members posting growth in 2009. The
government has promoted fiscally conservative policies, resulting in a debt-
to-GDP ratio of less than 25%, a fiscal deficit below 3%, and historically low
rates of inflation. Fitch and Moody's upgraded Indonesia's credit rating to
investment grade in December 2011. Indonesia still struggles with poverty
and unemployment, inadequate infrastructure, corruption, a complex
regulatory environment, and unequal resource distribution among regions.
The government in 2013 faces the ongoing challenge of improving
Indonesia’s insufficient infrastructure to remove impediments to economic
growth, labour unrest over wages, and reducing its fuel subsidy program in
the face of high oil prices.
2.2 General Economic Development and Status
Indonesia is Southeast Asia’s largest economy with 251 million people, and
GDP growth above 6.2% in 2012 and projected to remain above 6% for the
next five years. During the difficult global conditions of 2009, Indonesia’s
economy was among the top worldwide performers, due to a number of
factors, including strong domestic demand and rich natural resources. Solid
macroeconomic fundamentals, a stable currency and recent upgrades in
bond ratings have made in Indonesia an economy to watch in the coming
decade.
DOING BUSINESS IN INDONESIA | 14
Indonesia is a thriving democracy with significant regional autonomy. It is
located on the world’s major trade routes and has extensive natural
resources spread over an area the size of the United States and comprising
over 17,000 islands.
However, the business environment in Indonesia can be challenging. The
country is currently ranked 128 out of 183 for Ease of Doing Business by the
World Bank. Malaysian firms can find it complex and time consuming to
enter the market and to negotiate through the regulatory and industrial
landscape.
Indonesian infrastructure and service networks have not been developed
or maintained in accordance with the booming consumer led economy,
causing multiple transaction costs and inefficiencies that hamper exporters
and investors.
Deregulation has successfully reduced some barriers by creating more
transparent trade and investment regimes, but the bureaucracy can still be
cumbersome. Laws are often opaque or conflicting and some Ministries
may have very different regulations regarding similar actions.
Although measures have been undertaken by the Indonesian government,
corruption is still active at all levels of society, and is a concern for many
businesses looking to operate within Indonesia. Companies are suggested
to have a solid due diligence process in place.
Although improving, significant rule-of-law issues persist. Dispute settlement
mechanisms are not highly developed and business and regulatory
DOING BUSINESS IN INDONESIA | 15
disputes, which would be generally considered administrative or civil
matters in other countries, may be treated as criminal cases in Indonesia.
Competition from companies from Singapore, China, Japan, Korea, and
other regional players is intense, and Malaysian firms often have to adapt
their business model and pricing scheme to compete effectively.
2.3 Construction Industry Development
GDP at Current Market Price By Industrial Origin (Billion Rupiahs/ Billion US$),
2006-2012
Industry 2006 2007 2008 2009 2010
Construction 251,132.30 304,996.80 419,711.90 555,192.50 660,890.50
US$ 20.82 25.29 34.80 46.03 54.80
Industry 2011 2012
Construction 754,483.50 860,964.80
US$ 62.56 71.39
Growth Rate of Gross Domestic Product at 2000 Constant Market Prices By
Industrial Origin (Percent), 2006-2012
Industry 2006 2007 2008 2009 2010 2011 2012
Construction 8.34 8.53 7.55 7.07 6.95 6.65 7.5
It is interesting to note that the construction industry in Indonesia has
experienced a growth rate while mirroring its GDP growth, is always slightly
higher.
DOING BUSINESS IN INDONESIA | 16
Percentage Distribution of Gross Domestic Product at Current Market Prices
By Industrial Origin, 2006-2013
Industry 2006 2007 2008 2009 2010 2011 2012
Construction 7.5 7.7 8.5 9.9 10.25 10.16 10.45
The construction industry in Indonesia is one of the few industries that is
contributing bigger and bigger percentage to the GDP every year, except
in 2011.
Value of Construction Completed by Type of Construction, 2006 - 2011
(000.000 rupiah/ Billion US$)
Type of
Construction 2006 2007 2008 2009 2010 2011
Building
Construction
31,374,730 34,612,257 33,078,407 71,472,060 93,705,954 107,417,601
US$ 2,601.55 2,870.00 2,742.81 5,926.37 7,769.97 8,906.92
Civil
Construction
26,049,107 28,615,500 46,241,921 137,098,864 164,791,068 199,260,546
US$ 2,159.95 2,372.76 3,834.32 11,368.06 13,664.26 16,522.43
Specialized
Construction
14,519,472 18,447,216 22,695,272 47,057,295 54,675,972 63,699,771
US$ 1,203.93 1,529.61 1,881.86 3,901.93 4,533.66 5,281.90
TOTAL 71,943,309 81,674,973 102,015,600 255,628,219 313,172,994 370,377,918
US$ 5,965.44 6,772.38 8,459.00 21,196.36 25,967.91 30,711.27
DOING BUSINESS IN INDONESIA | 17
A total infrastructure investment of US$ 202.5 Billion or 5% of GDP is required
to maintain the targeted economic growth for the Five Years National
Development Plan 2010-2014. About 29% of this investment will be financed
by the central government, while 18% will be borne by the local
governments, and other 18% is to be financed by the respective State
Owned Enterprises. The remaining 35% of the investment is expected to be
financed by private sector.
The Government of Indonesia has put forward the Master plan for the
Acceleration and Expansion of the Economic Development (MP3EI) as an
integrated part of the existing national development planning system. The
required budget to implement this programme between 2011 and 2025 has
been estimated to be US$ 400 billion. Almost half of which will be allocated
to finance infrastructure projects.
There are list of infrastructure projects, which are ready to offer and
prioritised to implement under Public Private Partnership (or, PPP) scheme.
Three projects that include a seaport; a toll road and solid waste treatment
and disposal infrastructures worth at US$ 764 million are ready to offer. In
addition, there are also 21 priority projects worth at US$ 33.4 billion that
include the construction of toll roads, long span bridge, water supply, solid
waste treatment and disposal, airport, and strategic regional infrastructure
in provinces throughout Indonesia.
A forecast based on construction values indicates that in 2012 Indonesia
required 48.4 million tons of cement, 13.3 million tons of steel, 1.3 million tons
of asphalt and 210,000 units of heavy equipment. These demands will be
growing in the coming years as a result of economic and infrastructure
development.
DOING BUSINESS IN INDONESIA | 18
One of the issues that the Government has to address is the unbalanced
demand-supply of heavy equipment’s. Currently, the total number of
heavy equipment available in Indonesia has been recorded to be 150,000
units, 50% of which are registered in Jakarta. The Government is willing to
invite International manufactures and investors, instead of expanding the
import of such equipment.
The Government has committed to speed up the realisation of
infrastructure development by way of strengthening and revising it for
efficiency, collaboration with Public Private Partnership and full private
sector funding. The government has consistently conducted necessary
reforms to promote a conductive environmentally both in terms of
regulation and institution. The holistic reforms efforts have resulted in a
better environment for investment in Indonesia.
Profile of Construction Workforce
No Description Unit 2008 2009 2010 2011 2012
1 Total Number
of workforce
(all sectors)
Person
(million)
102.5 104.9 108.2 109.7 110.8
2 Construction
Sector
Person
(million)
5.44 5.49 5.59 6.34 6.79
Portion of total % 5.31 5.23 5.17 5.78 6.13
3 Education Level of Construction Workforce
Elementary
School
% 54 52 52 52 52
High School % 42 44 44 44 44
University / % 4 4 4 4 4
DOING BUSINESS IN INDONESIA | 19
Diploma
4 Certified Construction Workforce (% from total workforce)
Certified Skilled
labour
% 2.68 3.82 6.47 6.31 9.17
Certified
experts
% 1.14 1.83 2.20 2.03 1.91
2.7
5.76.3
8.39.6
10.5
1617
0
2
4
6
8
10
12
14
16
18
2005 2006 2007 2008 2009 2010 2011 2012
USD
, Bill
ion
Year
Infrastructure Fund By Central Government
DOING BUSINESS IN INDONESIA | 20
Materials and Equipment Demand for Infrastructure Projects
Item 2010 2011 2012 2013 2014
Cement
(Mil. MT)
8.6 12.3 13.7 13.9 16.0
Steel (Mil.
MT)
3.4 4.8 5.3 6.0 7.0
Asphalt
(Mil. MT)
0.8 1.2 1.3 1.7 2.0
Heavy
Equipment
(Thou, MT)
26.4 37.8 42.0 50.4 60.5
There has been a sharp rise in the number of construction contracting
companies operating in Indonesia in recent years. According to the
National Construction Services Development Board, in 2011 there was a
total of 182,800 contractors, up from around 112,000 in 2008. Reflecting this
expansion, competition is intense, and margins tend to be relatively low.
16.118.4
21.8
32.4
40.3
05
1015202530354045
2009 2010 2011 2012 2013
USD
, Bill
ion
Year
National Construction Market Data
DOING BUSINESS IN INDONESIA | 21
However, the vast majority of these companies are classified as being small-
sized firms. According to the Indonesian Builders Association (Gapensi), the
medium and large firms combined account for around 85% of total
construction output value, with the thousands of small contractors
competing for the remaining 15%.
The number of contractors classified as large rose from 695 to 1,742
between 2008 and 2011, while the number of medium-sized firms increased
from around 10,000 to 21,000, and small-sized firms expanded in number
from just over 100,000 to 160,000.
The number of large foreign contractors has also risen, from 79 in 2008 to
around 130 currently. The largest of these foreign operators are Kajima
(Japan), China Communications Construction, Daewoo Engineering
(Korea), and Leighton Holdings (Australia).
Despite the fragmented nature of the construction contractors sector, there
are a number of leading domestic players. The largest firms are fully or
partly state-owned, and these include Adhi Karya (ADHI) and Wijaya Krya
(WIKA), with markets shares of around 7%. The state players are well placed
to capture a large share of the expansion in Indonesia’s infrastructure
construction activity. This in part reflects the fact that these companies
have a solid presence across Indonesia. However, around 60% of
construction work (by value) currently takes place in the Java region.
Source: Ministry of Public Works, Indonesia
DOING BUSINESS IN INDONESIA | 22
3. ESSENTIAL INFORMATION FOR DOING BUSINESS IN INDONESIA
3.1 Method
3.1.1 How to Establish a Business Entity
The Indonesian Investment Coordinating Board (Badan Koordinasi
Penanaman Modal) attempts to operate as a one-stop center for investors.
Recent reforms have reduced the paperwork process and delays in
applying for the necessary government permits for foreign investments in
Indonesia. A business permit issued by the appropriate government agency
is required to establish an office in Indonesia. Depending on the nature of
the business, several government agencies may be involved in issuing a
business permit.
To open a foreign representative office in Indonesia, a company must
appoint a representative, who may be either an Indonesian national or an
expatriate. A foreign representative office in Indonesia is actually more of a
liaison office. Under Indonesian law, a representative office is restricted in
the types of activities that it can pursue. For example, these offices are
restricted to signing sales contracts, collecting payments, conducting trade
activities and sales transactions, and participating in other related business
activities. Prior to opening an office, however, the firm must establish itself as
a legal entity by registering with the proper Indonesian government
authorities. The process is as follows:
A letter of intent, a letter of statement, and a letter of appointment
(indicating the appointed representative), from company headquarters on
official letterhead, must be sent to the Indonesian Embassy or an
DOING BUSINESS IN INDONESIA | 23
Indonesian Consulate for notarization. A letter of reference from the
embassy or consulate is also required.
The notarized letter of intent, the notarized letter of appointment, and the
letter of reference, along with the resume of the appointed company
representative and his or her Indonesian work permit (KIMS Card) must to
be submitted. If the appointed company representative is an Indonesian
citizen, a copy of his/her Personal Identity Card (KTP) needs to be submitted
instead. Documents are submitted to:
Directorate of Trade Development
Directorate General for Domestic Trade
Ministry of Industry and Trade
Jl. M.I. Ridwan Rais No. 5
Jakarta 10110
Tel: (62-21) 3858171 Ext. 1137
Fax: (62-21) 23528531
Regional representative offices, classified as serving two or more other
ASEAN nations, can also be established in Indonesia. The regional
representative office is limited to more of a liaison role and is restricted from
participating in many business transactions. Interested companies should
contact the BKPM for registration information:
Capital Investment Coordinating Board (BKPM)
Jl. Jendral Gatot Subroto 44
Jakarta 12190, Indonesia
Tel: (62-21) 5252-008
Fax: (62-21) 5264-211
DOING BUSINESS IN INDONESIA | 24
Email: [email protected]
Since 1994, the government has removed most requirements for domestic
equity in joint ventures. However, foreign investors who opt for 100 percent
initial ownership are suggested to divest to Indonesians at least some share,
even as little as one percent, after 15 years. This can be accomplished
through the stock market. In 2001, the President issued a decree regulating
joint ventures for small and medium-sized companies.
As a practical matter, a local joint venture partner is often essential for
success in this market, for the same reason that an active Indonesian agent
or distributor has advantages over a foreign trade representative office. The
choice of an Indonesian joint venture partner is critical for many reasons,
especially for knowledge of the local scene and contacts, which are
important for successful operations in Indonesia. A few experienced firms
provide background, credit-type reports on Indonesian entrepreneurs and
firms.
A partnership in Indonesia is difficult to dissolve. Consequently, the first
choice has to be the right choice. Business sense is as crucial to any
commercial endeavour in Indonesia as it is anywhere else; "contacts"
alone, while important, cannot substitute for business skills in an Indonesian
partner.
Because Indonesians place great importance on personal relationships and
mutual understanding, partnerships tend to be based primarily on genuine
accord, with the written contract playing a less significant role. It is therefore
important that any agreement be well understood by both sides. A
contract over which there are conflicting interpretations is certain to cause
DOING BUSINESS IN INDONESIA | 25
future problems. In any case, a soundly written legal agreement is strongly
encouraged, despite the weakness of the Indonesian legal system for
enforcing contracts.
In some cases, licensing arrangements for products/services are more cost-
effective options for Malaysian companies doing business in Indonesia, but
firms should apply the same cautions recommended for joint venture
partners.
3.1.2 Construction Practices
There are three choices in setting up a business entity in Indonesia:
PT PMA – foreign investment company
PT local – local Indonesian PT
Representative Office – alternative entity but restrictive
The application process to start a business normally starts with BKPM, then
Notary. It will take a while, but is more efficient now.
Representative
Office
PT PMA PT Local
Name of entity Based on home
country company
name
Can be any
name, as long as
it is not already in
use
Can be any
name, as long as
it is not already in
use
Ownership No Equity –
“owned” by
home country
company
Depending on
industry, foreign
ownership can be
up to 100%
No foreign
ownership
allowed. Must be
100% Indonesian
Restriction – No revenue Revenue allowed Revenue allowed
DOING BUSINESS IN INDONESIA | 26
Representative
Office
PT PMA PT Local
revenue
allowed. Only as
marketing office
and costs allowed
Restriction –
Investment in
industry
Not applicable Based on
Negative List. Not
all industries open
for foreign
investment. If yes,
can also have
restriction on
shareholding
including joint
ventures.
Generally no
except where
certain industries
require domestic
investment
approval.
Approval required
for setting up?
Yes – BKPM
(Investment
Coordinating
Board)
Yes – BKPM
(Investment
Coordinating
Board)
No except in
certain industries
Board of
Commissioners
Not applicable Minimum one,
foreigners allowed
Minimum one,
foreigners allowed
Board of Directors Not applicable Minimum one,
foreigners allowed
Minimum one,
foreigners allowed
Investment & paid
up capital
No paid up
capital required
Minimum
investment USD
250,000 or paid up
capital of USD
100,000
Paid up generally
RP 50 million / USD
5,500
Reporting Yes Yes including No except under
DOING BUSINESS IN INDONESIA | 27
Representative
Office
PT PMA PT Local
requirements –
investment?
periodic reporting
and subsequent
application for
permanent
operating license
domestic
investment
approach
Open bank
account
Yes Yes Yes
Bank signatories Foreigners
allowed if KITAS
holder or director
or komisaris
Foreigners
allowed if KITAS
holder or director
or komisaris
Foreigners
allowed if KITAS
holder or director
or komisaris
Work permits
allowed?
Yes Yes Yes
Fiscal incentive? Yes No No
Purchase assets Yes Yes Yes
Other incentives? None Importation /
Master List
None
Others Only capital cities
BKPM is the Investment Coordinating Board of the Republic of Indonesia. As
the primary interface between business and Government, BKPM is
mandated to boost domestic and foreign direct investment through
creating a conducive investment climate. The Board was restored to
Ministerial status in 2007, and reporting directly to the President of the
Republic of Indonesia, this investment agency’s goal is not only to seek
DOING BUSINESS IN INDONESIA | 28
more domestic and foreign investment, but also seek quality investments
that reduce social inequality and unemployment.
Based on MoU between the Ministry of Finance, Head of National
Development Planning Board (Bappenas) and Head of Investment
Coordinating Board (BKPM), BKPM tasks of accelerating the implementation
of PPP infrastructure are as follows:
Packaging information on infrastructure projects that are ready to offer,
so that the projects are attractive to investors, including setting: PPP
project that will be the pioneer project (showcase project) and a target
completion of each showcase project until the obtainment of project’s
funding (financial close); action and role plan of each relevant
stakeholders of the showcase projects
Finding and identifying potential investors and offering infrastructure
projects to investors
Facilitating marketing of infrastructure projects that are offered through
activities such as: market sounding; road shows; business forum
Facilitating cooperation with prospective investors and government
support
Delivering the list of potential investors and supporting documents to the
person in charge of cooperation projects to the Ministry / Agency or
Local Government (contracting agency) for further processing
Facilitating issuance of necessary license and non-license in the
implementation of PPP projects through One Stop Integrated Services for
Investment (PTSP) in the field of investment
Monitoring the implementation of action plans and targets of each
relevant stakeholders showcase project
Coordinating settlement-related issues encountered showcase project
(clearing house agent)
DOING BUSINESS IN INDONESIA | 29
The construction services in Indonesia can be divided into three:
Construction design – i.e. survey, general plan, macro and micro study,
feasibility study, technical and operational plan and research
Construction performance
Construction supervision – i.e. supervision of construction performance
and quality assurance and results of the construction performance
Construction services can be performed by individual or business entity
The below types of projects:
Design and build projects
EPC projects
Turn-key projects
Performance based projects
can awarded to a single contractor if the contractor fulfilled the
requirements of utilizing advanced technology and the project is assessed
as a high risk project.
Business entity shall obtain a business license (Ijin Usaha Jasa Konstruksi /
IUJK) and any related certification, qualification, classification to conduct
the construction services and a business certificate or Sertifikat Badan
Usaha (SBU)
Any workers or engineers who wishes to work in the business entity shall also
need to be certified. Individual and business entity must be responsible for
their construction services.
Additional licenses required for construction, engineering companies:
ISO 9001:2008
DOING BUSINESS IN INDONESIA | 30
Sertifikat Tenaga Ahli (SKA) / Certificate of Manpower / Competency
Construction services can only be conducted if it is made through
Public tender
Limited tender
Direct bidding
Direct appointment
Other than establishing a foreign investment business entity, foreigners may
also establish a representative office (RO). RO is only permitted to conduct
complicated construction projects which utilize high technology and / or
are high risk projects.
To establish an RO, one shall need to obtain RO license from the MPW.
A joint operation or ikatan kerjasama operasi with a 100% local company
who obtained SBU and IUJK must be established.
Expatriate work permit needs to be renewed annually and is currently no
longer subject to fiscal. This permit is essential if one have to be in Indonesia
for long periods.
Process of Establishing Company in Indonesia for Foreign Organization
The process of establishing company in Indonesia for foreign organization is shown as flowchart below:
DOING BUSINESS IN INDONESIA | 31
Flowchart for establishing a company
Specific Licenses may necessary to be obtained, if in the first BKPM
approval, it is stated that the company need to obtain a specific license
from the related Government Institution/Department.
If the company is not required to obtain a specific license, then after the
process as stated on number 3 above, the next process is directly to obtain
Permanent Business License (IUT) (as mentioned on Number 5 above)
For more details please refer to BKPM website at:
Establishing a Business and Conducting Registration (Domestic Investment)
DOING BUSINESS IN INDONESIA | 32
http://email01.bkpm.go.id/nswi/investmenteng.nsf/vLinkBySub/nswi1_PMDN
?OpenDocument&pilih=nswi_1_&investasi=PMDN&kota=&sektor=&investasi
detil=
Establishing a Business and Conducting Registration (Foreign Investment)
http://email01.bkpm.go.id/nswi/investmenteng.nsf/vLinkBySub/nswi1_PMA?
OpenDocument&pilih=nswi_1_&investasi=PMA&kota=&sektor=&investasidet
il=
3.1.3 Law & Related Construction Law
Construction Law 18/1999
Government Regulation 28/2000 on Role of Construction Services
Community, last amended by Government Regulation 92/2010
Government Regulation 29/2000 on Implementation of Construction
Services, amended by Government Regulation 59/2010
MPW Regulation 04/2011 regarding Guidelines on Requirements for the
Granting of Construction Business License
Investment Law 25/2007 – mandate equal treatment for foreign and
domestic investors; no minimum capital requirement, freedom to
repatriate capital; all business sectors or business types shall be open to
investment activities, except for business sectors or business types that
are declared to be closed and open with requirements
Government Regulation 12/2001 jo 31/2007 – exemption of value added
tax of imported capital goods, machinery or equipment (except spare
parts) which cannot be produced domestically. Submit tax-free letter to
the Director General of Taxes
Law 2/2012 – new land acquisition bill, provides certainties in land pricing
and timing of land acquisition process
DOING BUSINESS IN INDONESIA | 33
Government Regulation 1/2007 jo 62/2008 jo 52/2001 – reduction of net
income for 30% from total amount of investment, charged in 6 years with
each 5% per year; depreciation and amortization accelerated to fixed
intangible assets (building and non-building); income tax on dividends
paid to foreign tax subject to 10% or lower rate according to double
taxation avoidance agreement; compensation for losses of more than 5
years but not more than 10 years
Regulation of the MOF 176/PMK.011/2009 – exemption from import duty
of the import of machines for a period of 2 years; exemption from import
duty on the imports of goods and materials for production for a
maximum period of 2 years; exemption from import duty on the imports
of goods and materials for production for a period of 4 years is granted
to a company which is using locally produced machines at least 30% of
the total value of machines for its production
Presidential Regulation 54/2010 and its amendment 70/2012, foreign
companies are only allowed to participate in tender for projects with the
value of: IDR 100 billion (US$0.0083 billion) and above for constructing
services; IDR 10 billion (US$0.0008. billion) and above for consulting
services
Construction services are open for foreign investment with limitation:
Open to foreign ownership of maximum 67% for construction
implementation services using advanced technology and/or with high
risk and/or with a project value of more than IDR 1 billion (US$0.829
billion)
Open to foreign ownership of maximum 55% for construction business
services / construction consultancy services
Open to foreign ownership of maximum 95% for engineering,
procurement and construction (EPC) services
DOING BUSINESS IN INDONESIA | 34
Construction contract must at least have the following provisions:
Information of the contracting parties
Construction scope of work
Responsibilities of the parties
Information of the construction experts (qualification, and classification
of experts to perform the construction services)
Rights & obligations of the contracting parties
Terms of payment
Breach of contract
Dispute settlement
Termination
Force majeure
Rights & obligations of the parties if the construction fails
Workers protection
Environmental aspects
Intellectual property rights
The construction contract should be made in Bahasa Indonesia or bilingual
(if there are any foreign entities in the construction contract). The governing
language will be based on the mutual agreement of the contracting
parties. Indonesian law should be used as the governing law. Prescriptions
may be set forth on incentives or bonus. Dispute settlement can be in the
form of litigation proceeding, arbitration or other alternative forms.
DOING BUSINESS IN INDONESIA | 35
3.14 Taxation
Income Tax
Income tax in Indonesia is progressive and applied to both individual(s) and
enterprises. A self-assessment method is used to calculate the tax.
The Tax Rate for Individual(s)
Taxable annual income Income Tax Rate
Up to IDR 50 million (US$0.0041 million) 5%
Over IDR 50 million to IDR 250 million
(US$0.0041 million to US$0.207 million)
15%
Over IDR 250 million to IDR 500 million
(US$0.207 million to US$0.0415 million)
25%
Over IDR 500 million (US$0.0415 million) 30%
The Tax Rate for Corporate(s)
Year Income Tax Rate
2009 28 %
2010 and onwards 25 %
Limited Company which 40% of their
shares trade in stock exchange market
5 % Lower than normal rate
Gross turnover up to IDR 50.000.000.000
(US$4,145,592.02)
50 % deduction from normal
rate
Land & Building Tax
Land & building tax is payable annually on land, buildings and permanent
structures. The effective rates are nominal, typically not more than 0.1% per
annum of the value of property.
DOING BUSINESS IN INDONESIA | 36
Avoidance of Double Taxation Agreements
To avoid incidental double taxation on certain income such as profits,
dividends, interests, fees, and royalties, Indonesia has signed agreements
(tax treaties) with the 59 countries as follows:
Algeria
Hungary
Pakistan
Sweden
Australia
India
Qatar
Switzerland
Austria
Italy
The Philippines
Syria
Belgium
Japan
Poland
Taiwan
Bulgaria
Jordan
Portugal
Thailand
Brunei Darussalam
Korea,
Romania
Tunisia
Bangladesh
Russia
Turkey
Canada
Kuwait
Saudi Arabia
Ukraine
Czech Republic
Luxembourg
Seychelles
United Arab Emirates
China
Malaysia
Singapore
United Kingdom
Denmark
Mexico
Slovakia
United States of America
Finland
Mongolia
South Africa
Uzbekistan
Egypt
Netherland
Spain
Venezuela
France
New Zealand
Sri Lanka
Vietnam
German
Norway
Sudan
Withholding tax rates applied to residents of these countries signing tax treaty
with Indonesia, these may be reduced based on the provisions of the
particular tax treaty.
DOING BUSINESS IN INDONESIA | 37
Stamp Duty
Stamp duty is nominal only at either IDR 3,000 (US$0.245) or IDR 6,000
(US$0.49) on certain documents. The rate of IDR 6,000 (US$0.49) is applicable
for letters of agreement and other letters, Notary Deed and Land Deed
including its copies. For all documents bearing a sum of money, the rate is
IDR 6,000 (US$0.49) when the value stated in the document is more than IDR 1
million (US$82.91), and IDR 3,000 (US$0.49) when the value is between IDR
500,000 (US$41.45) and IDR 1 million (US$82.91). Below IDR 500,000 (US$41.45)
is not subject to stamp duty. For cheques, the rate is IDR 3,000 (US$0.245)
regardless of money value stated.
Losses
Basically the government provides loss carry forward facility for a period of 5
years and additional 5 years if fulfill certain conditions (Government
Regulation No. 1/2007 jo. No. 62/2008)
Depreciation and Amortization Rates
Depreciation
(Government Regulation No. 1/2007 jo. No. 62/2008 and other tax
implementation regulations)
Depreciation cost on assets is deductible from the income before tax.
Depreciable assets are grouped into four categories depending on the
useful life of the assets.
Investors may choose either the straight line method (for periods of less
than 20 years) or the fast declining balance method (except for buildings)
Depreciation rate is determined according to the useful life and utilization
such as:
DOING BUSINESS IN INDONESIA | 38
Physical (Tangible)
Asset
Useful Life
(years)
Method of Calculation
Straight Line (%) Double Declining
Balance (%)
l. Non Building
Group 1 4 25 50
Group 2 8 12.5 25
Group 3 16 6.26 12.5
Group 4 20 5 10
ll. Building
Permanent 20 5
Non-Permanent 10 10
Amortization
Non-Physical
Asset
Useful Life (years) Method of Calculation
Straight Line (%) Declining Balance
(%)
Group 1 4 25 50
Group 2 8 12.5 25
Group 3 16 6.25 12.5
Group 4 20 5 10
Value Added Tax
In normal cases, 10% Value Added Tax (VAT) is applied to imports,
manufactured goods and most services. (See Government Regulation No.
12/2001 jo. No. 43/2002 jo. 46/2003 and other related tax implementation
regulations).
DOING BUSINESS IN INDONESIA | 39
According to the government regulation No. 7 Year 2007:
1. Value Added Tax (VAT)
Free Charge of Value Added Tax (VAT) to the importation of certain VAT
charged goods having the strategic term, consist of:
Capital Goods in the form of machineries and factory equipment, either
in installed or separated, including spare parts
Feed of poultry and fish and raw materials to make feed
Seed and or seeding of agricultural material, plantation, forestry, livestock,
aquaculture, or fishery
Agricultural products;
2. Free Charge of Value Added Tax Imposition (VAT)
Free charge of Value Added Tax (VAT) to the delivery of certain VAT charge
goods having the strategic term, consist of:
Capital goods in the form of machineries and factory equipment, either in
installed or separated, excluding spare parts, which is directly needed to
produce VAT charge products
Feed of poultry and fish and or raw material to make the feed
Seed and or seeding of agricultural material plantation, forestry, livestock,
aquaculture, or fishery
Agriculture products.
Incentives
1. Import Duties
All investment projects of PMA (Penanaman Modal Asing or Foreign
Investment) as well as PMDN (Penanaman Modal Dalam Negeri or Local
Investment) projects which are approved by the Investment Coordinating
Board or by the Office of Investment in the respective districts, including
DOING BUSINESS IN INDONESIA | 40
existing PMA and PMDN companies expanding their projects to produce
similar product(s) in excess of 30% of installed capacities or diversifying their
products, will be granted the following facilities:
a. Relief from import duty so that the final tariffs become 0%. Import duties
which are mentioned in the Indonesian Customs Tariff Book (BTBMI). This is
stipulated in the Ministry of Finance's Decree No. 176/PMK.011/2009 dated
November 16, 2009 which is effective from December 2009.
On the importation of capital goods namely machinery, equipment,
spare parts and auxiliary equipment for an import period of 2 years,
started from the date of stipulation of decisions on import duty relief.
On the importation of goods and materials or raw materials regardless
of their types and composition, which are used as materials or
components to produce finished goods or to produce services for the
purpose of two years full production (accumulated production time).
b. Exemption from Transfer of Ownership Fee for ship registration deed /
certificate made for the first time in Indonesia.
2. Tax Facilities
The government has introduced a Tax Bill No's 16, 17, 18, 19 and 20 of 2000
and applied since January 1, 2001. Based on this tax law, the domestic and
foreign investors will be granted tax allowances in certain sector and/or area
as follows:
An Investment Tax Allowance in the form of taxable income reduction as
much as 30 % of the realized investment spread in 6 (six) years.
Accelerated depreciation and amortization.
A Loss carried forward facility for period of no more than 10 (ten) years.
DOING BUSINESS IN INDONESIA | 41
A 10 % income tax on dividends, and possibly being lower if stipulated in
the provisions of an existing particular tax treaty.
The government has also introduced provisions No's 146 of 2000 of 2000 and
12 of 2001 on the importation and/or delivery of Selected Taxable Goods,
and or the provision of Selected Taxable Services as well as the importation
and or delivery of Selected Strategic Goods which are exempted from Value
Added Tax.
3. Bonded Zones
The industrial companies which are located in the bonded areas are
provided with many incentives as follows:
a. Exemption from import duty, excise, income tax of Article 22, Value
Added Tax on Luxury Goods on the importation of capital goods and
equipment including raw materials for the production process.
b. Allowed to divert their products amounted to 50% of their export (in
term of value) for the final products, and 100% of their exports (in term of
value) for other than final products to the Indonesian customs area, through
normal import procedure including payment of customs duties.
c. Allowed to sell scrap or waste to Indonesian custom area as long as it
contains at the highest tolerance of 5% of the amount of the material used in
the production process.
d. Allowed to lend their own machineries and equipment to their
subcontractors located outside bonded zones for no longer than 2 years in
order to further process their own products.
Exemption of Value Added Tax and Sales Tax on Luxury Goods on the
delivery of products for further processing from bonded zones to their
subcontractors outside the bonded zones or the other way around as well as
among companies in these areas.
DOING BUSINESS IN INDONESIA | 42
3.2 Money
3.2.1 Banking System
The Indonesian banking system has consolidated significantly in the wake of
the Asian financial crisis. As of end-2011, Indonesia had 120 commercial
banks and 1,669 rural banks. The largest 10 banks contain almost 63.3
percent of bank assets. As ranked by assets, the following are the four largest
state-owned banks: Bank Mandiri, Bank Rakyat Indonesia, Bank Negara
Indonesia, and Bank Tabungan Negara. Bank Indonesia (BI), the central bank
of Indonesia and an independent state institution, regulates key aspects of
the banking and financial system, including bank regulation and supervision.
Indonesia is encouraging the development of Islamic banking and seeks to
increase its share of total banking assets to over five percent. As of October
2011, Islamic banking institutions in Indonesia comprised about 3.5 percent of
total banking system assets. In October 2008, the government raised the
Deposit Insurance Corp. (LPS) guarantee on bank deposits to Rp.2 billion
(about US$225,300) from Rp.100 million. Only those accounts carrying interest
rates equal to or below LPS maximum guaranteed reference rates are
deemed eligible for LPS deposit guarantees. As of February 15, 2012, those
rates were 6.0 percent on rupiah deposits and 1.25 percent on foreign
currency deposits.
The Indonesian Export Financing Agency (LPEI), which operates under the
name of Indonesia Exim Bank, provides competitive export financing and
advisory and other exported related services. The export credit agency’s
goal is to help promote access to worldwide markets for Indonesia’s export-
DOING BUSINESS IN INDONESIA | 43
related commodities, support Indonesia’s international trade, and improve
Indonesian exporter competitiveness in global markets.
LPEI services include:
• Export Working Capital Loan Guarantees: LPEI provides Export Working
Capital Loan Guarantees facility to a commercial bank on risks related to the
financial default of the Exporter that has been issued the EWCL Guarantee
from said Commercial Bank;
• Letters of Credit (L/C): LPEI provides L/C facility to Indonesians who import
raw materials, spare-parts, and machinery for export production;
• Standby Letters of Credit: LPEI provides the Standby L/C facility to the
Exporter in the form of guarantees that are issued to cover the risk faced by
the Beneficiary should the Exporter fail to meet its contract/obligation that
forms the basis for the issuance of the Standby L/C;
• Export Bills or Receivables Discounting: LPEI provides a financing scheme
facility allowing exporters to receive immediate payment for their export-
related receivables;
• Export Investment Loan: LPEI provides the Export Investment Loan facility to
Exporters in order to finance investments that are undertaken to create
and/or boost production capacity for exports;
• Export Working Capital Loans: The Export Working Capital Loan (EWCL) is a
financing facility that provides working capital need to Exporter in
connection with the export of goods and services;
• Warehouse Receipt Financing: The Warehouse Receipt Financing is a
working capital financing facility that is provided by Indonesia Eximbank to
Exporter, the underwriting of which is tied to the value of goods/commodities
that are stored in warehouses that are operated by the Warehouse
Manager;
DOING BUSINESS IN INDONESIA | 44
• Trust Receipts: The Trust Receipt is part of the import financing facility
provided by Indonesia Eximbank to Exporters for the purpose of retrieving
imported goods (raw materials) from ships or ports to be processed, sold, and
parts of the proceeds of which will be used to settle all liabilities related to the
import;
• Advisory Services: in addition to providing export/import financing, LPEI also
provides advisory services to exporters. These services include: trade finance
training for the banking sector and exporters; provision of technical
assistance in setting up trade finance systems; policy and procedures training
for the banking sector and other related export players; consultations on
international trade rules; and provision of international trade policy advice to
policy makers.
Indonesia Eximbank is located at Gedung Bursa Efek Jakarta, Tower II 8/F, Jl.
Jend. Sudirman, Kav 52-53, Jakarta. Tel: +62 21 515 4638, Fax: +62 21 515 4639.
3.2.2 Method of Payment
Malaysian firms exporting to Indonesia use a variety of payment methods
depending on their relationship with the purchaser. Payment options for
export transactions include letters of credit (L/C), cash in advance, wire
transfer, cash on delivery and open account.
Confirmed, irrevocable letters of credit, while imposing additional costs,
minimize risks faced by the exporter. On June 24, 2010, the Ministry of Trade
issued 27/M-DAG/PER/6/2010, cancelling regulation No.1/M-
DAG/PER/1/2009, which required the use of a letter of credit through a
domestic foreign exchange bank for exports of specified commodity exports.
DOING BUSINESS IN INDONESIA | 45
3.2.3 Cost of Doing Business in Indonesia
Operating in Indonesia is not cheap. Deals are generally denominated in
USD and Rupiah is becoming more common. Rentals are typically payable
up to 2 years in advance.
Cost of living can be high if you are living in big cities. Education cost is also
high.
Another thing to consider is the price of fuel, which is currently higher than in
Malaysia. The Government subsidized RON 88, gasoil and kerosene. RON 92
and 95 are not subsidized.
Wages in general will remain on an upward trend in the coming years.
The increase in minimum wages is contentious, with companies complaining
of the threat that higher wages pose to competitiveness. Reflecting such
pressure, the government is allowing some concessions for labour intensive
industries.
Given the large portion of informal sector workers in construction, changes in
actual wages for construction workers are lower than increases in minimum
wages. However, the sharp upward trend in formal sector wages will still put
greater pressure on construction companies’ profit margins.
Although supply is expanding, the strong demand for construction materials is
pushing up prices in Indonesia. Based on the wholesale price index,
construction materials in general rose by 4.5% on an annual average basis in
2012, accelerating from 3.8% in 2011 and 2.4% in 2010. Prices for materials
DOING BUSINESS IN INDONESIA | 46
used in public works on roads, bridges and ports were up by 5%, and for
materials in residential and non-residential buildings by 4.2%.
With the government planning to move ahead with massive infrastructure
construction projects, materials demand will strengthen, and with it prices for
key materials.
The import bill for key products could also rise sharply, even though local
producers will shift away from exporting in order to focus on meeting
domestic demand, as has already been the case with cement. Imports of
base metals have been on a rising trend in recent years, increasing from
USD9.6 billion in 2009 to USD20.1 billion in 2012.
The government has made assurance that it will contain rises in the prices of
key construction materials in the face of rising demand and upward pressure
on fuel prices. However, this could prove challenging, as it is not only higher
fuel costs that could push up materials prices, but also rising labour costs
given the government’s plans to push up minimum wages.
3.2.4 Project Financing
Indonesia has prioritized infrastructure development in its medium-term
development plan, or Rencana Pembangunan Jangka Menengah 2010-
2014 (RPJM), and allocated increased resources to infrastructure projects in
its 2010 and 2012 budgets. It is also receiving significant funding for a variety
of infrastructure projects and other development priorities from multilateral
development banks, primarily the World Bank and Asian Development Bank
(ADB). Malaysian firms can participate in projects funded by these institutions.
DOING BUSINESS IN INDONESIA | 47
World Bank
The World Bank Group is a multilateral lending agency consisting of five
closely related institutions: the International Bank for Reconstruction and
Development (IBRD), the International Development Association (IDA), the
International Finance Corporation (IFC), the Multilateral Investment
Guarantee Agency (MIGA), and the International Center for Settlement of
Investment Disputes (ICSID). The World Bank provides concessional loans to
developing countries to help reduce poverty and to finance investments that
contribute to economic growth.
As of September 2011, the World Bank’s active financing portfolio in
Indonesia comprised of 77 projects with total commitments of US$6.977
billion. These lending commitments were made for roads, energy, education,
health, irrigation and rural development. In addition, the World Bank
supervises another 11 projects financed out the Aceh and Nias, and the Java
Multi Donor Trust Funds. In 2009, the World Bank approved the new 2009 –
2012 Country Partnership Strategy (CPS) for Indonesia and increased lending
to US$4.2 billion from US$2 billion annually. It includes the US$2 billion in
financing to help Indonesia overcome the global economic crisis.
In November 2010, the World Bank approved the Seventh Development
Policy Loan for Indonesia totalling US$600 million (a loan to support
government reform efforts to improve the investment climate, strengthen
public financial management and governance and enhance policy
alleviation and service delivery efforts), and also approved the Fourth
Infrastructure Development Policy Loan totalling US$200 million to increase
the level and effectiveness of infrastructure financing by addressing
financing directly provided by the national government, incentives for sub-
DOING BUSINESS IN INDONESIA | 48
national governments to improve infrastructure delivery, and the policy
environment for private infrastructure investment.
The World Bank support of Indonesia’s infrastructure priorities in its medium-
term development strategy includes a substantial program of investment
lending, including energy (focus primarily on clean and renewable energy
technologies), roads (strengthening fiduciary, operational and management
capacities of local counterparts and improve the pace of implementation in
ongoing projects), and urban infrastructure, such as low income housing,
water supply (such as flood mitigation and dam operations improvement),
and sanitation (focus on building capacity to plan system integration for
centralized, community and household sanitation, and make long-term
financing available for sanitation infrastructure development).
The International Bank for Reconstruction and Development (IBRD)
The IBRD provides funding for creditworthy developing countries with
relatively high per capita income, as well as technical assistance and policy
advice. Loans are made only to governments or to agencies that can obtain
a government guarantee. The IBRD also provides partial risk or partial credit
guarantees (with a counter-guarantee from their government) to private
lenders on development projects. Opportunities exist for Malaysian
companies to supply goods and services in connection with these loans.
-- The International Development Association (IDA) provides assistance on
concessional terms to the poorest developing countries that are not
sufficiently creditworthy for IBRD financing. As a middle-income country,
Indonesia has graduated from IDA. Its access to IDA ceased in June 2008.
-- The International Finance Corporation (IFC) is an affiliate of the World Bank
that provides project financing for private investment in developing
countries. IFC offers long-term loans and equity investments, as well as other
DOING BUSINESS IN INDONESIA | 49
financing services. Unlike the IBRD and IDA, the IFC does not require
government guarantees. IFC has a committed investment portfolio of US$695
million in Indonesia, of which 57 percent is invested in financial markets
projects, 24 percent in agribusiness and 17 percent in manufacturing.
Currently, IFC committed US$960 million to various sector such as mining,
manufacture, stock market, agribusiness, finance, technology and
education. IFC expects to invest about US$300 million annually in Indonesia in
priority sectors of finance, infrastructure and commodity-based supply
chains. Malaysian companies seeking investment funds should contact the
IFC directly. (See http://www.ifc.org for contact information.)
-- The Multilateral Investment Guarantee Agency (MIGA) promotes the flow
of foreign direct investment among member countries by insuring
investments against non-commercial (political) risk and by providing
promotional and advisory services to help member countries create an
attractive investment climate. Indonesia is a member of MIGA. Malaysian
companies seeking investment guarantees should contact MIGA. (See
http://www.miga.org for further information).
Asian Development Bank
Indonesia was a founding member of the ADB in 1966 and one of the bank’s
largest borrowers. In 2011, Indonesia received US$1.1 billion in ADB assistance
for projects such as regional roads, urban sanitation, water supply and water
resources management.
For 2012, ADB has allocated US$840 million in lending and grant assistance to
Indonesia for polytechnics development (US$75 million); geothermal and
renewable energy development (US$90 million); the West Kalimantan Power
Grid (US$50 million); capital markets development (US$300 million); and state
audit reform (US$60 million). Two other projects are on stand-by: the Java-Bali
DOING BUSINESS IN INDONESIA | 50
power transmission (US$185 million); and neighbourhood upgrade and shelter
(US$100 million). ADB will draw up its future lending program when the
government completes its on-going borrowing policy review.
ADB’s lending and grant assistance yield opportunities for Malaysian
consultants, contractors and equipment and materials suppliers.
Islamic Development Bank
The Islamic Development Bank (IDB) seeks to foster the economic
development and social progress of member countries and Muslim
communities through participation in equity capital and grant loans for
projects, as well as providing other types of financial assistance. The IDB has
an active program in Indonesia. (See http://www.isdb.org for additional
information and contact information).
Project financing is crucial in successfully capturing business in Indonesia,
especially for engineering services, project management or “big-ticket”
purchases. Malaysian companies often compete with third country
companies offering concessionary financing through soft loans, so it is vital to
offer the best financial terms commercially available.
EXIM Bank
Export-Import Bank of Malaysia Berhad (EXIM Bank) was incorporated on 29th
August 1995 as a government owned development financial institution
through a wholly owned subsidiary of the Minister of Finance Incorporated.
The Bank was established to promote reverse investment and export of
strategic sectors such as capital goods, infrastructure projects, shipping,
value added manufactured products and to facilitate the entry of Malaysian
companies to new markets, particularly to the non-traditional markets.
DOING BUSINESS IN INDONESIA | 51
As an agency under the purview of the Ministry of Finance, EXIM Bank’s
mandated role as specified by the Government is: To provide credit facilities
to finance and support exports and imports of goods, services and overseas
projects with emphasis on non-traditional markets as well as the provision of
export credit insurance services, export financing insurance, overseas
investments insurance and guarantee facilities.
The Bank’s clientele consists of large corporations, SMEs, foreign governments
and foreign companies and cover all sectors ranging from trading,
manufacturing and infrastructure.
EXIM Bank in its export promotion effort also collaborates with Malaysian
government agencies including Ministry of International Trade and Industry
(MITI), Malaysia External Trade Development Corporation (MATRADE),
Malaysian Investment Development Authority (MIDA), Small And Medium
Enterprise Corporation Malaysia (SMECorp), and Construction Industry
Development Board Malaysia (CIDB).
Overseas Project / Contract Financing
Overseas Project / Contract Financing facility is available to Malaysian
owned and controlled companies. The facility provides financial support to
Malaysian investors/contractors undertaking project overseas such as
infrastructure, manufacturing and other development projects.
Overseas Project / Contract Financing-i
Overseas Project/Contract Financing-i facility is available to Malaysian
controlled companies or Malaysian companies (registered as per Company
Act 1965). The facility provides financial support to Malaysian investors/
DOING BUSINESS IN INDONESIA | 52
contractors undertaking projects overseas such as infrastructure,
manufacturing and other developmental projects.
The facility must be used for Shariah compliant purposes.
3.3 Manpower
3.3.1 Labour Resources
Indonesian labour is relatively low cost by world standards, but the country's
under-funded education system and rigid labour laws combine to make
Indonesia's competitiveness lag behind other Asian competitors. Investors
frequently cite high severance payments to dismissed employees, restrictions
on outsourcing and contract workers, and rules on expatriate workers, as
significant obstacles to new investment in Indonesia. Lack of education is
especially problematic among unskilled and semi-skilled workers. Labour
contracts are relatively straightforward to negotiate but are subject to
renegotiation, despite the existence of a written agreement. Local courts are
likely to ignore written contracts and side with local citizens in labour disputes.
On the other hand, some socially responsible foreign investors view
Indonesia’s labour regulatory framework, respect for freedom of association,
and the right unionize as an advantage to investing in the country. The
Government of Indonesia established in January 2006 a new Labour Court as
part of a broader labour dispute resolution system. Expert local human
resources advice is essential for Malaysian companies doing business in
Indonesia, even those only opening representative offices.
Industrial relations at the factory level had been improving in recent years,
but some business leaders are concerned that recent strikes could influence
DOING BUSINESS IN INDONESIA | 53
an increase in factory-level industrial actions. Each year provincial
governments adjust their respective provincial minimum wages. Unions have
demanded annual minimum wage increases (regional, district, or industrial
sector) as high as 50%, but most provinces settled for increases closer to 10%.
In 2011, the highest annual increase was 16.5% for West Papua province, thus
making the minimum wage there the highest for the year. There was an
increase in 2011 of labour protests, sometimes violent, over negotiations of
2012 minimum wage levels.
Draft revisions to the labour law – particularly reductions in severance
payments and removal of restrictions on outsourcing and contract
employment – led to labour protests in 2006 that prompted the Government
of Indonesia to suspend efforts to amend the law, and to instead formulate
regulations aimed at changing severance pay to ease the burden on
employers while providing a cushion to the unemployed. In October 2011,
the Indonesian government passed a revised Social Security Law that will
establish a national agency to support workers in the event of work accident,
death, retirement, or old age. The new law will begin taking effect in January
2014.
3.3.2 Wages Rates
Basic salary and wage levels can vary considerably with geographic
location and across industries.
According to Law No.13/2003 Article 89, each province/city is given the
power to frame its own Provincial Minimum Wage or “UMP” which is reviewed
and set annually on the basis of agreement between corporates,
organisations and labour unions as finally determined by the Governor of
DOING BUSINESS IN INDONESIA | 54
each province. Regulation of the minimum wage is stipulated in Articles 88,
89, and 90:
a. Provincial or district/city-based minimum wage
b. Provincial or district/city-based sectoral minimum wage
Once a year each provincial government adjusts the UMP based on a
Governor Decree on Minimum Wage. A Remuneration Council, a non-
structural tripartite organisation which consists of government, entrepreneur
associations and labour organisation representatives (as stipulated under
Presidential Decree No.107/2004) makes recommendations on the UMP
based on a “decent living needs survey”. There is anticipation that when
regional autonomy is fully implemented at provincial level, there will be a
Regency Minimum Wage (“UMK”) for each city in every province based on
recommendations from the Regent Mayor and the Remuneration Council.
In November 2012, the Government of Jakarta raised the UMP for Jakarta by
44% to IDR 2.2 million (USD 228) based on Governor of Jakarta Regulation
No.189/2012 concerning the 2013 Provincial Minimum Wage, recording its
highest ever increment. Companies that are not able to meet the
requirement have the option to enter into dialogue with workers which is
required to be completed before the new minimum wage is scheduled to be
implemented in January 2013. The Confederation of Indonesian Labor Unions
(KSPI) is monitoring compliance with new UMP.
Under Law No.13/2003, an employer is prohibited from paying below the
minimum wage which covers basic salary and a fixed allowance, the salary
component comprising at least 75%.
DOING BUSINESS IN INDONESIA | 55
Working hours under the Labor Law are 7 or 8 hour days depending on
whether 5 or 6 days are worked per week, with additional hours considered
overtime which is calculated based on formulae in the law.
In Jakarta, skilled worker may have IDR 100,000 (US8.29) daily wage while in
other regions such as Yogyakarta only IDR 40,000 (US$3.31).
South Sumatra – minimum wage USD 133 per month
East Java – minimum wage USD 78 per month
East Kalimantan – minimum wage USD 90.5 (IDR 1,084,000) per month
Under Law No.3/1992 or the JAMSOSTEK Law, companies with a payroll
exceeding IDR 1 million (US$82.90) per month, or employing 10 or more staff,
must enroll their employees in the JAMSOSTEK program.
JAMSOSTEK is a government social security scheme, mandatory by law, to
which an employee and employer must make monthly contributions based
on a percentage of basic salary for: (i) employee work accident insurance,
(ii) retirement benefit fund, (iii) life insurance, and iv) health care benefit
coverage. The first three are mandatory. Health care benefit contributions
are payable only if the employer does not provide equivalent or better
health benefits.
Contribution fees need to comply with the standard provisions in
Government Decree No.14/1993. Fees can vary across job classifications and
industries, but generally fall in a range of 4.24% to 5.74% of basic salary.
Employee contributions are made by the employer except for retirement
benefit insurance to which the employee also contributes.
DOING BUSINESS IN INDONESIA | 56
Both permanent and contract employees need to be covered by
JAMSOSTEK. Expatriates are required to be enrolled unless covered by an
equivalent scheme in his or her home country
The rapid growth of the construction sector and the high demand for
construction workers has seen labour costs rise on a steep trajectory. The
wages and salary index calculated by Statistics Indonesia shows that salaries
and wages have increased by 19.3% year-on-year on average in every
month since 2009, much above its long term average of 3.9%, reflecting
strong activities in the sector.
Wages in general will remain on an upward trend in the coming years.
3.4 MATERIALS
Supply of building materials plays a significant part in the construction
industry. In this section, we take a look at a list of top building material
suppliers in Indonesia and their contact details.
3.4.1 List of Major Building Materials Suppliers and Their Contact Address
NO NAMES ADDRESS NUMBER EMAIL
1. PT Semen
Indonesia
(Persero)Tbk
Type of building
materials:
PT Semen Indonesia
(Persero)Tbk
Kantor Pusat
Gedung Utama SG
Jl. Veteran
Gresik 61122
Tel : (62-31) 398
1732, (62-31) 398
1745
Fax : (62-31) 398
3209, (62-31) 397
om
DOING BUSINESS IN INDONESIA | 57
NO NAMES ADDRESS NUMBER EMAIL
Cement Jawa
Timur,Indonesia
2264
2.
PT Semen Tonasa
Type of building
materials:
Cement
Lantai 2 Kantor Pusat
PT Semen Tonasa,
Biringere-Pangkep,
Sulawesi Selatan
90651
Telephone :
(0410) 312345
Fax : (0410)
310060
customercare@sement
onasa.co.id
3. PT Semen Kupang
Type of building
materials:
Cement
Jalan Yos Sudarso,
Osmo, Tenao
Kotak Pos 37,
Kupang
Nusa Teggara Timur
Tel: 62-380
832100
62-380-832105
Fax: 62-380-
832107
semen_kupang@telko
m.net
4. PT Semen Gresik
Type of building
materials:
Cement
Jalan Veteran No.
10, Gresik
61122, Jawa Timur
Tel: 62-31-
3981732
62-31-981745
Fax: 62-31-
3983209
5. PT Holcim
Indonesia
Type of building
materials:
Cement,
concrete, pre-
cast
Jamsostek Tower North
Bldg 14-15 Fl.
Jl. Jend. Gatot Subroto
No. 38
Jakarta 12930
Tel: 62-21-
52962011
Fax: 62-21-
52962022
6. PT Indocement
Tunggal Prakarsa
Wisma Indocement
14th Floor
Tel: 62-21-
2512121
corpsec@indocement.
co.id
DOING BUSINESS IN INDONESIA | 58
NO NAMES ADDRESS NUMBER EMAIL
TBK
Type of building
materials:
Cement,
concrete,
aggregates
Jalan Jend.
Sudirman Kav. 70-71
Jakarta 12910,
Indonesia
Fax: 62-21-
2510060
7. PT Semen Baturaja
Type of building
materials:
Cement
Jalan Abikusno
Cokrosuyoso
Kertapati,
Palembang
Sumatera Selatan
30001
P O Box 1175
Tel: 62-771-
511261
Fax: 62-771-
512126
8. PT Semen Andalas
Indonesia
Type of building
materials:
Cement
Jalan Raya Lhok
Nga
Km. 16, P O Box 30,
Banda Aceh,
Tel: 62-651-22571
Fax: 62-651-
44101
9. PT Semen Bosowa
Maros
Type of building
materials:
Cement
Jalan Urip Sumoharjo
No 188
P O Box 273, Ujung
Pandang,
Sulawesi Selatan
Tel: 62-411-
444444
Fax: 62-411-
447744
10. PT Semen Padang
Type of building
materials:
Cement
Indarung Padang
25237, Sumatera
Barat
Telp. (0751) 815250;
08126611910 (gsm)
Fax. 0751-815590
Tel: (0751)
815250
Fax. 0751-815590
DOING BUSINESS IN INDONESIA | 59
NO NAMES ADDRESS NUMBER EMAIL
Fax. Marketing 0751-
815001
11. CV. Putra
Pundarika
Type of building
materials:
Paint, Electrical,
Piping, etc
Ruko Bunga Raya
Blok B No. 16
Kelurahan Belian
Kecamatan Nongsa
Batam Centre, Pulau
Batam
Tel: 77 8733 6875
12. PT Arwana
Citramulia Tbk
Type of building
materials:
Ceramic tiles
Ruko Sentra Niaga
Puri Indah, blok T2-
24, Jalan Puri Indah
Raya, 11610
Tel: 5830 2363
13. PT Bhineka Ciria
Artana
Types of building
materials:
Door, locks, glass
JL. Arteri Mangga
Dua Block F-6 No. 1
Pusat Perdagangan
Bahan Bangunan
dan Interior
Jakarta 10730 -
INDONESIA
Tel: (+6221) 601
1719 - 20
Fax: (+6221) 601
6985
14. PT Cipta Mortar
Utama
Types of building
materials:
Premixed mortar
Menara Sudirman
Lantai 11
Jl. Jendral Sudirman
Kav. 60, Jakarta
12160
Tel: (62-21) 522
6619
Fax. (62-21) 522
6629
15. PT. Knauf Cilandak Tel : +62 21 789 [email protected]
DOING BUSINESS IN INDONESIA | 60
NO NAMES ADDRESS NUMBER EMAIL
Gypsum Indonesi
a,
Types of building
materials:
Gypsum board,
compound and
plaster, gypsum
tile, metal section
Commercial Estate,
Garden Centre 5th
Floor Suite 16(B),
JL Raya Cilandak
KKOJakarta 12560,
Indonesia
1661
Fax : +62 21 789
1662
16. PT Lafarge
Cement Indonesia
Types of building
materials:
Cement
Gedung Graha
CIMB Niaga,25th
Floor
Jl. Jend. Sudirman
Kav. 58
Jakarta 12190 -
Indonesia
Tel: 62 21 2953
3800
Fax: 62 21 2953
3801
17. PT. Adhimix
Precast
Types of building
materials:
Readymix
concrete, precast
concrete
Indonesia Graha
Anugerah Lt. 3
Jl. Raya Ps. Minggu
No. 17 A
Pancoran Jakarta
Selatan 12780
Tel: (021) 799
4666
Fax: (021) 726
8669
18. PT BangunPerkasa
Adhitamasentra
Types of building
materials:
Graha GRC board
Lt.3
Jl. S.Parman Kav.64
Jakarta 11410 -
Indonesia
Tel: (62-21)
53666800
Fax : (62-21)
53666720
DOING BUSINESS IN INDONESIA | 61
NO NAMES ADDRESS NUMBER EMAIL
Glass fibre
cement board
19. PT. Maccaferri
Indonesia
Types of building
materials:
wire mesh basket,
woven wire mesh
unit, chainlink, etc
Aminta Plaza 2 nd
floor, suite 204
Jl. TB Simatupang
kav.10 | Jakarta
12310 Indonesia
Tel: (62-21) 750
6555, Fax : (62-
21) 750 6553
20. PT. Jaindo Metal
Industries
Types of building
materials:
Metal roofing,
light steel house
framing, etc.
Jl. Soekarno Hatta
No.227
Bandung 40233
Tel: +62-22-
6030755
Fax: +62-22-
6030165
headoffice@j-
steel.co.id
3.5 Machinery
Supply of machineries plays a significant part in the construction industry. In this
section, we take a look at a list of top suppliers of machineries in Indonesia and
their contact details.
DOING BUSINESS IN INDONESIA | 62
3.5.1 List of Local Machinery Manufacturers & Suppliers
NO NAMES ADDRESS NUMBER EMAIL
1. PT Komatsu
Indonesia
Komatsu Indonesia
Industrial
Development
Center, Cakung
Cilincing Plant
Jl. Raya Cakung
Cilincing Km. 4
Jakarta Utara 14140
+62.21 440 0611
+62.21 440 0615
2. PT Hexindo
Adiperkasa Tbk
Kawasan Industri Pulo
Gadung
Jl. Pulo Kambing II
Kav. I - II No. 33
Jakarta
Indonesia 13930
Tel. +62-
(0)214611688
Fax. +62-
(0)214611686
inquiry@hexindo-
tbk.co.id
3. PT Trakindo Utama PT Trakindo Utama
JL Cilandak KKO
Raya
Jakarta 12560,
Indonesia
Tel: (62-21)
7822373
Fax : (62-21)
7817786
.id
4. PT. Daya Kobelco
Construction
Machinery
Indonesia
Pondok Indah Office
Tower 3, 15th Fl, Suite
1202
Jl. Sultan Iskandar
Muda Kav. VTA
Pondok Indah 12310,
Jakarta Selatan
Tel: +62(0)21
7592 2828
Fax: +62(0)21
7592 2822
d
DOING BUSINESS IN INDONESIA | 63
NO NAMES ADDRESS NUMBER EMAIL
5. PT. United Tractors
Pandu
Engineering
Jl. Jababeka XI Blok
H 30 – 40
Kawasan Industri
Jababeka
Cikarang 17530
Indonesia
Tel: +62 21 893
5016
Fax : +62 21 893
4772/6353
6. PT Waja Kamajaya
Sentosa
Jl Penggilingan Raya,
No 99 Jakarta 13940,
Indonesia
+62-21 460 1651
+62-21 460 4203
7. PT Mitrindo
Dutaprakarsa
Jln. Hidup Baru 131
Jakarta Utara -
Indonesia
Tel: (021) 6405
803
Fax: (021) 6471
7908
m
8. PT Sanggar
Sarana Baja
MT Building, 5th Floor,
Suite 501, Jl. Cilandak
KKO No.1, Jakarta
12560
Tel: +6221 2997
6830
+6221 2997
6835
9. PT. Delimajaya
Carrosserie
Industry
Jl. KH. Soleh Iskandar
No.5
Bogor, Indonesia
16111
Tel: +62 251 8654
300
Fax:+62 251 8660
273
info@delimajayacarross
erie.com,
10. PT. Universal Tekno
Reksajaya
Jl. Raya Bekasi Km.
22, Cakung Jakarta
13910 Indonesia
Tel: +62 21 2457
6818
Fax: +62 21 4682
2748
DOING BUSINESS IN INDONESIA | 64
NO NAMES ADDRESS NUMBER EMAIL
11. PT Sarana Steel
Engineering
Mechanical Structure
Fabrication /
Engineering
Jl. Pulo Kambing II
No.11, Kawasan
Industri Pulo Gadung
Jakarta 13930 -
Indonesia .
Tel: (021) -
46826589
Fax: (021) -
4609679
12. PT Mitrindo
Dutaprakarsa
Jln. Hidup Baru 131
Jakarta Utara -
Indonesia
Tel: (021) 6405
803
Fax: (021) 6471
7908
m
DOING BUSINESS IN INDONESIA | 65
4. POTENTIAL BUSINESS OPPORTUNITIES
Indonesia offers a fast growing market for construction industry and this
makes it an ideal platform for potential investors, local and foreign, looking to
expand their businesses. The construction industry of Indonesia is one of its
most dynamic sector and thanks to planned investments in the infrastructure,
Indonesia has a huge potential for investors and businesses. In this section, we
take a look at a list of potential business opportunities for construction
companies looking to expand into Indonesia.
4.1 Listing of Some Potential Projects Opportunities
i. Tanah Ampo Cruise Terminal, Karangasem, Bali
ii. Medan – Kualanamu – Tebing Tinggi Toll Road, North Sumatera
iii. Solid Waste Management Improvement Project – Bandung Municipal,
West Java
iv. South Banten Airport, Pandeglang, Banten
v. Medan – Binjai Toll Road, North Sumatera
vi. Pekanbaru – Kandis – Dumai Toll Road, Riau
vii. Palembang – Indralaya Toll Road, South Sumatera
viii. Tegineneng – Babatan Toll Road, Lampung
ix. Strategic Infrastructure and Regional Development of Sunda Strait,
Lampung – Banten
x. Serpong - Balaraja Toll Road, Banten
xi. Tanjung Priok Access Toll Road, DKI Jakarta
xii. Pasir Koja – Soreang Toll Road, West Java
xiii. Cileunyi – Sumedang – Dawuan Toll Road, West Java
xiv. Terusan Pasteur – Ujung Berung – Cileunyi – Gedebage Toll Road, West
Java
DOING BUSINESS IN INDONESIA | 66
xv. Pandaan – Malang Toll Road, East Java
xvi. Balikpapan – Samarinda – Toll Road, East Kalimantan
xvii. Manado – Bitung Toll Road, North Sulawesi
xviii. DKI Jakarta – Bekasi – Karawang Water Supply (Jatiluhur), DKI Jakarta –
West Java
xix. Pondok Gede Water Supply, Bekasi, West Java
xx. West Semarang Municipal Water Supply, Central Java
xxi. Lamongan Regency Water Supply, East Java
xxii. Southern Bali Water Supply, Bali
xxiii. Solid Waste Treatment & Final Disposal – Greater Bandung Area – West
Java
xxiv. Solid Waste Treatment & Final Disposal – Bogor & Depok – West Java
xxv. Solid Waste Treatment & Final Disposal - Putri Cempo Mojosongo,
Surakarta, Central Java
xxvi. South Sumatera – 9 Mine Mouth Coal Fired Power Plant (2 x 600 MW)
xxvii. South Sumatera – 10 Mine Mouth Coal Fired Power Plant (1 x 600 MW)
xxviii. Jambi Coal Fired Power Plant (2 x 400 MW), Jambi
xxix. Karama Hydro Power Plant, West Sulawesi
xxx. Kertajati International Airport, West Java
xxxi. Kulonprogo International Airport, DI Yogyakarta
xxxii. Development of New Bali Airport, Bali
xxxiii. Consolidated Urban Development, Banda Aceh
xxxiv. Development of Pekanbaru Cargo Terminal, Riau
xxxv. Development of Karya Jaya Integrated Terminal, Palembang, South
Sumatera
xxxvi. Expansion of Tanjung Priok Port, Cilamaya, Karawang, West Java
xxxvii. Development of Pelaihari Port, South Kalimantan
xxxviii. Development of Maloy International Port, East Kalimantan
xxxix. Rantau Prapat – Duri – Dumai – Tl. Kuantan – Muaro Railway
DOING BUSINESS IN INDONESIA | 67
xl. Integrated Terminal of Gedebage (Railway), Bandung, West Java
xli. Revitalization of Yogyakarta Rail Station & Pedestrianization of
Malioboro, DI Yogyakarta
xlii. South Pekanbaru Water Supply, Riau
xliii. East Agam and Bukittinggi Water Supply, West Sumatera
xliv. Expansion of Padang Water Supply, West Sumatera
xlv. Karian Water Supply, Banten
xlvi. North Bekasi Regency Water Supply, West Java
xlvii. Jatigede Water Supply, West Java
xlviii. Ungaran Water Supply, Semarang Regency, Central Java
xlix. Central Lombok Water Supply, West Nusa Tenggara
l. Greater Pontianak Water Supply, West Kalimantan
li. East Pontianak Municipal Water Supply, West Kalimantan
lii. Sampit Water Supply, Central Kalimantan
liii. Palangkaraya Water Supply, Central Kalimantan
liv. Improvement Water Supply Palu Municipal, Central Sulawesi
lv. Padang Solid Waste Management, West Sumatera
lvi. DKI Jakarta Sewage Treatment Plant
lvii. Batang Toru Hydro Electric Power Plant (510 MW), North Sumatera
lviii. Merangin Hydro Electric Power Plant (350 MW), Jambi
(Source: http:pkps.bappenas.go.id)
4.2 Networking Channels
i. Malaysia Club Jakarta
Objectives of Malaysia Club Jakarta (MCJ):
DOING BUSINESS IN INDONESIA | 68
a) To promote closer liaisons among the Malaysian community in
Indonesia.
b) To collect and disseminate business information in collaboration with
the Malaysian Embassy, particularly the Malaysian Trade Office in
Jakarta.
c) To update and maintain records on the particulars of the Malaysian
business community, professionals, and other Malaysian nationals in
Jakarta and Indonesia in general.
d) To assist in social, cultural, and sport activities organized by the
Malaysian Embassy and other Malaysian organizations in Indonesia, as
well as to foster national aspirations and solidarity.
e) To provide a networking platform for business/social/cultural
interactions with the international community in Indonesia and the
Indonesian community.
f) To assist in the development of the Malaysian business interests in
Indonesia.
Events held by MCJ:
1. Monthly Members Gathering for social and business interactions.
2. Annual Family Day
3. Quarterly Golf Tournament
4. National Day Golf Tournament
5. National Day Sports Tournament/Embassy Function
6. Annual Dinner and Dance
7. Business Networking by Malaysia Club Business Council (MCBC)
ii. Malaysian Trade Commissioner in Indonesia
Malaysian Trade Commissioner Bahagian Perdagangan
DOING BUSINESS IN INDONESIA | 69
Kedutaan Besar Malaysia
Jalan H.R. Rasuna Said Kav. X / 6
No. 1-2, Kuningan, Jakarta Selatan 12940
Tel: (62-21) 522 4947
Fax: (62-21) 522 4974
Email: [email protected]
Telex: 60813 MALAY JKT
5. LIST OF TOP 15 CONTRACTORS IN INDONESIA
Getting the right partner is important in penetrating a developing market with
complex business environment like Indonesia. In this section, we take a look at a list
of top 15 contractors in Indonesia along with brief company profile of their
businesses.
No. Company/ Contact Sales 2011
(million USD)
Sales 2012
(million USD)
1 PT Wijaya Karya (Persero) Tbk
Jl D.I. Panjaitan Kav 9
Jakarta 13340 – Indonesia
Tel: (6221) 8192808/ 8508640/
8508650 ext.1917
Fax: (6221) 8191235/ 81999713
Contact: Destiawan
www.wika.co.id
976.6 1234.2
2 PT Waskita Karya (Persero) Tbk
Waskita Building
799.4 917.5
DOING BUSINESS IN INDONESIA | 70
No. Company/ Contact Sales 2011
(million USD)
Sales 2012
(million USD)
Jl. MT Haryono Kav 10 Cawang
Jakarta 13340 – Indonesia
Tel: (6221) 8508410/20
Fax: (6221) 8508506
www.waskita.co.id
3 PT PP (Persero) Tbk
Plaza PP – Wisma Subyianto 3rd
Floor
Jl. Letjend TB Simatupang No. 57
Pasar Rebo – Jakarta 13760
Tel: (6221) 87784137
Fax: (6221) 87784136
620.0 800.0
4 PT Adhi Karya (Persero) Tbk
Jl. Raya Pasar Minggu Km 18
Jakarta 12510 - Indonesia
Tel: (6221) 7975312
Fax: (6221) 7975311
735.7 794.5
5 PT Hutama Karya (Persero) Tbk
Haryono M.T. Street Kav 8.
Cawang
East Jakarta, Indonesia
Tel: (6221) 8193708
Fax: (6221) 8196107
Contact: Widi Suharyanto
(Marketing General Manager)
375.2 524.8
DOING BUSINESS IN INDONESIA | 71
No. Company/ Contact Sales 2011
(million USD)
Sales 2012
(million USD)
6 PT Totoal Bangun Persada Tbk
Jl. Letjend. S. Parman no. 106
Jakarta 11440 – Indoneisa
Tel: (6221) 5666999
Fax: (6221) 5663069
www.totalbp.com
390.0 430.0
7 PT Jaya Konstruksi Manggala
Pratama Tbk
Kantar Taman Bintaro Jaya B
Jl. Bintara Raya – Jakarta 12330 –
Indonesia
Tel: (6221) 7363939
Fax: (6221) 7363959
Contact: Mr Drajat Wijanorko
www.jayakontruksi.com
353.0 412.0
8 PT Multi Structure
Wisma 76, 20th Floor
Jl. Letjend. S. Parman
Kav 76, Jakarta 11410 – Jakarta
Tel: (6221) 53666699/ 700
Fax: (6221) 53666577/578
Contact: Mr Kukuh Bandiono Putro
217.0 260.0
DOING BUSINESS IN INDONESIA | 72
No. Company/ Contact Sales 2011
(million USD)
Sales 2012
(million USD)
www.multistructure.com
9 PT Nusa Raya Cipta
Graha Cipta Building 2nd Floor
Jl. Dl Panjaitan No. 40
Jakarta 13350
Tel: (6221) 8193526/ 582/ 508
Fax: (6221) 8193544/3471
173.8 210.9
10 PT Brantas Abipraya (Persero)
Jl. D.I. Panjaitan Jav – 14 Cawang
Jakarta Timur 13340
Tel: (6221) 8516290
Fax: (6221) 8516095
Contact: Ir. C. Thomas
Pangribuan, MM
www.brantas-abipraya.com
124.7 171.7
11 PT Bangun Cipta Kontraktor
Office Tower Gandaria 8
27th Floor Unit A & B
Jl. Sultan Iskandar Muda No. 8
Jakarta Selatan 12240
Tel: (6221) 29036565
Fax: (6221) 29036566
www.ptbck.com
101.1 170.0
DOING BUSINESS IN INDONESIA | 73
No. Company/ Contact Sales 2011
(million USD)
Sales 2012
(million USD)
12 PT Ninda Karya (Persero)
Jl. Letjend Haryono MT
Kav 22 Jakarta Timur 13630
Tel: (6221) 8093276
Fax: (6221) 8093105
Contact: Mr Respati Hari Winarno
nindyakarya.co.id)
www.nindyakarya.co.id
94.2 167.9
13 PT Nusa Konstruksi Enjiniring
Jalan Sunan Kalijaga 64, Jakarta
Selatan
Tel: (6221) 7221003
Fax: (6221) 7396580
Contact: Mr Djohan Halim
www.nusakonstruksi.com
120.7 126.7
14 PT Wijaya Kusuma Contractors
www.wkcnet.com
Contact: Ms Clara Agustina
(6221) 3905658
83.8 116.3
DOING BUSINESS IN INDONESIA | 74
No. Company/ Contact Sales 2011
(million USD)
Sales 2012
(million USD)
15 PT Tatamulia Nusantara Indah
Sapta Mulia Center
Jl. Rawa Gelam V Kav OR-3B
Pulogadung Industrial Estate
Jakarta 13930 – Indonesia
Tel: (6221) 4606960
<100 <110
1. PT Wijaya Karya (Persero) TBK
WIKA was born out of the nationalization process of a Dutch company bearing the
name Naamloze Vennotschap Technische Handel Maatschappij en Bouwbedijf Vis
en Co. or NV Vis en Co. Pursuant To Government Regulation No. 2 / 1960 and
Minister of Public Works and Electric Power (PUTL) Decree No. 5 dated 11 March
1960, WIKA was established with the name of Perusahaan Negara Bangunan
Widjaja Karja. WIKA’s line of business at the time was electrical and water pipe
installation works. In the early 1960s, WIKA took part in the construction project of
Gelanggang Olah Raga Bung Karno on the occasion of the Games of the New
Emerging Forces (GANEFO) and the 4th Asian Games in Jakarta. The first significant
growth occurred in 1972, when the name Perusahaan Negara Widjaja Karja was
changed to PT Wijaya Karya. WIKA then developed into a construction contractor
by handling various important projects such as the installation of electricity grids at
Asahan and the Jatiluhur irrigation project.
As per 31 December 2011, the government of the Republic of Indonesia holds 65%
of the Company’s ownership, while the rest was owned by the public, including
employees, through the Employee Stock Allocation (ESA), Employee Stock Option
(ESOP) and Management Stock Ownership Program (MSOP). WIKA has won several
DOING BUSINESS IN INDONESIA | 75
outstanding awards such as The Best Emiten Real Estate & Construction Sector
Construction Industry by MNC Business Award 2013, The Best Website in
Communication Category by BeritaSatu.com and The Best Implementation of
Integrated Management System SCIS Award 2013 by SUCOFINDO – SICSO AWARD
(http://www.wika.co.id)
2. PT Waskita Karya (Persero) Tbk
Established in January 1, 1961 Waskita Karya is one of leading state companies in
Indonesia which plays a major role in the development of the country. Originated
from a Dutch company named “Volker Aannemings Maatschappij N.V.”, which
was expropriated under the Government's Decree No.62/1961, Waskita Karya was
initialy paticipated in the water related developments including reclamation,
dredging, harbor and irrigation. Ever since 1973, however, legal status of Waskita
Karya's has changed to “Persero” PT. Waskita Karya, with a more familliar summon
“Waskita”. From then on, the company started to expand its business as general
contractor engaging in a wider range of construction activities including highways,
bridges, ports, airports, buildings, sewerage plants, cement plants, factories and
other industrial facilities.
Waskita has achieved distinguished performances in the construction of long span
prestressed concrete bridge using free cantilever system by successfully completed
three bridges: Raja Mandala, Rantau Berangin, and Barelang IV. Another major
achievement using similar technology was accomplished in the construction of
"Pasteur-Cikapayang-Surapati” elevated road and cable stayed bridge in
Bandung. The same success story was also achieved in the construction of several
major dams such as Pondok, Grogkak, Tilong, Gapit, and Sumi, which were
completed ahead of schedule with satisfying quality. (http://www.waskita.co.id)
3. PT PP (Persero) Tbk
DOING BUSINESS IN INDONESIA | 76
PT PP (Persero) was established under the name of NV Pembangunan Perumahan
based on the Notarial Deed No. 48 of August 26, 1953. At the time it was
established PT PP (Persero) was entrusted to build houses for the officers of PT
Semen Gresik Tbk, a subsidiary of BAPINDO in Gresik. Along with increased trust, PT
PP (Persero) received the duty to construct large projects that were related to war
compensations the Government of Japan paid to the Republic of Indonesia,
namely Hotel Indonesia, Bali Beach Hotel, Ambarukmo Palace Hotel and
Samudera Beach Hotel.
For more than five decades, PT PP (Persero) has been a key player in the national
construction business. Several mega projects have been constructed in that period.
Subsequently, starting in 1991, PT PP (Persero) diversified its business, including office
space rental at Plaza PP and realty business development in the area of Cibubur,
and also the establishment of several subsidiaries through partnerships with foreign
companies, among others PT PPTaisei Indonesia Construction and PT Mitracipta
Polasarana. (http://www.pt-pp.com)
4. PT Adhi Karya (Persero) Tbk
ADHI originated from Dutch company named Architecten-en-Ingenicure
Annemersbedrijf Associatie Selle en de Bruyn, Reyerse en de Vries NV (Associatie
NV), which nationalized and then set as PN Adhi Karya on 11 March 1960. Since
the date of June 1, 1974, ADHI a Limited Liability Company, upon authorization by
the Minister of Justice of the Republic of Indonesia. ADHI is the first construction
company listed on the Indonesia Stock Exchange (formerly Jakarta Stock
Exchange) since March 18, 2004, where at the end of 2003 the Republic of
Indonesia has removed 49% of its shares to the public through the mechanism of an
Initial Public Offering (IPO). With the advent of pressure on construction due to the
intensity of competition and price wars, in 2006, PT Adhi Karya (Persero) Tbk
decided to reconstruct the company vision and mission into Become one of the
selected company (company of choice) in the line of construction services,
DOING BUSINESS IN INDONESIA | 77
engineering, and infrastructure investment . This vision have led to the creation of
the tagline "Beyond Construction" which illustrates the organization’s motivation into
moving to other related businesses such as the EPC business and Investments.
PT Adhi Karya (Persero) Tbk has also won numerous awards which among it were
The Banker’s Choice Award for Leading Corporation in Indonesia 2012, Best of the
Best Awards The ‘A’ List- 40 top performing Small & Midsized Company 2011and
BUMN Award GCG.(http://www.adhi.co.id)
5. PT Hutama Karya (Persero)
PT HUTAMA KARYA (Persero), hereinafter will be referred as PT HK, was initially a
Dutch East Indies private company “Hollandsch Beton Maatschappij”, which was
nationalized in 1961 based on the Regulation of the Government of Republic of
Indonesia No.61/1961 dated March 29, 1961, named as PN HUTAMA KARYA. By
early 2000s which also known as the Millennium era where economic dynamics
grow faster, PT. Hutama Karya has revitalized itself by expanding business for private
sectors by building: High Rise Building (Bakrie Tower, Apartment), infrastructure
(highway). Along with the expansion, quality wise is still the concern of PT. Hutama
Karya. This is proved by receiving ISO 9001:2008, ISO 14001:2004, and OHAS
18001:2007. In 2010s, Changes of strategic environment has force PT. Hutama Karya
to change. A series of plannings in the future have been made, one of them is
becoming a public company before 2015.
PT Hutama Karya (PERSERO) also received many prestigious awards such as
Konstruksi Indonesia 2012 Awards-Alila Villas Bintan Project, The Best for Human
Capital Index (2012), BUMN Marketing Awards 2012, Anugerah Cinta Karya Bangsa
2012 - 2nd places were among the awards that the company received.
6. PT Total Bangun Persada Tbk
DOING BUSINESS IN INDONESIA | 78
PT Total Bangun Persada Tbk roots in Indonesian building and construction stretches
back a quarter century to 1970 when they were first founded as PT Tjahja Rimba
Kentjana. In their early years as a contractor and developer, they benefited from
the exposure to a wide range of building projects that included both residential
housing as well as commercial complexes. In the early 1980s they undertook a
major restructuring that saw the creation of Total Bangun Persada, a company with
a substantially strengthened capital base and a revitalized management team.
Out of this was born a vision, to become a leading Indonesian building contractor
through pride and excellence in construction. At present, PT Total Bangun Persada
is Indonesia’s premier building contractor. The realization of this vision has been
made possible through two major initiatives. The first of these is a clear focus only on
building construction, with a sole emphasis on high rise projects such as office and
commercial buildings, or developments like industrial projects and resorts.
The second is their commitment to bringing an international standard of building
construction and project management to the Indonesian building construction
industry which lead to a high demand for their expertise in the construction of high
rise projects. As Indonesia continues to surge ahead on the path of national
development, Total Bangun Persada intends to remain at the forefront of its chosen
industry, establishing new standards of excellence in building construction, bringing
the best practice and processes that are demanded by property developers, and
supporting this with one of the industry’s highest levels of professionalism and
commitment. (http://www.totalbp.com)
7. PT Jaya Konstruksi Manggala Pratama, Tbk
PT Jaya Konstruksi Manggala Pratama is a member of Jaya Group, is an integrated
infrastructure company with core capabilities in the infrastructure company with
core capabilities in the infrastructure and building construction sector, asphalt and
DOING BUSINESS IN INDONESIA | 79
liquefied petroleum gas (LPG) trading, precast concrete manufacturing and
specialized mechanical and electrical engineering and maintenance services. The
company was established on 23rd December 1982, when the contracting division of
PT Pembangunan Jaya was spun off to become a separate legal entity. The
Company’s shares have been listed on the Indonesia Stock Exchange (IDX) since
December 2007.
As one of the leading suppliers of infrastructure development in Indonesia, the
company has participated in numerous major projects and developments that
have made a key contribution to the country’s social and economic growth,
including airports, toll roads, power plants, water works and flood control and other
public facilities.
The company’s portfolio includes four direct subsidiaries PT Jaya Trade Indonesia, PT
Jaya Teknik Indonesia, PT Jaya Beton Indonesia and PT Jaya Daido Concrete, all
acquired in 2007, subsequently acquired a further 12 indirect subsidiaries.
8. Pt Multi Structure
PT Multi Structure was established in 1974 with construction as its main business. Their
first project was the development of the State Oil and Gas Company (Pertamina)
housing project in Balikpapan, East Kalimantan. Since then, the company has
developed rapidly into a highly capable construction company. To improve their
competence, they also expand their business to manufacturing industry in order to
support the construction business. The company’s operations has grown in four
major regions in Indonesia, they are the Sulawesi region, Kalimantan region, Jawa
region and Sumatera region. They are also expanding their services outside
Indonesia with the establishment of a new subsidiary that will handle various
overseas construction projects. As a professional provider of construction services,
they try to keep track of the latest development in construction business by joining
various contractor associations such as AABI, AKAINDO, AKI, GAPENSI and KADIN.
DOING BUSINESS IN INDONESIA | 80
9. PT Nusa Raya Cipta
PT Nusa Raya Cipta Tbk (NRC) started when the company was still recognized as PT
National Roadbuilders & Construction Co which was established in 1968. In 17th
September 1975, the founding fathers of Roadbuilders & Construction Co, Ir.
Benjamin Arman Suriajaya and Ir. Marseno Wirjosaputro decided to establish PT
Nusa Raya Cipta Tbk (NRC), which now has turned into one of Indonesia’s biggest
general contractors.
PT. Nusa Raya Cipta is one of the subsidiary companies of PT. Surya Semesta
Internusa Tbk. (SSIA). Ever since 1992 PT. Nusa Raya Cipta head office has been at
Graha Cipta Building, Jakarta Timur and has branches in Medan, Semarang,
Surabaya, Denpasar, and Balikpapan. With the skills and experience that they have
developed for more than three decades while handling prestigious construction
projects of huge and medium scale, NRC begins to gain wide recognition. They
started to build hundreds of factories, apartments, commercial buildings, hotels,
hospitals, infrastructure (bridges, toll road, highways, industrial area development,
flyover), as well as the installation of piling at many places in Indonesia.
On 10th December 2009 the Company has improved and obtained the Certificate
of Quality Management System ISO 9001:2008 from PT. Sucofindo International
Certification Services (SICS) and Certification of Health and Safety Management
System from the Department of Manpower and Transmigration of the Republic of
Indonesia. Recently, the Company has obtained OHSAS 18001:2007 Certificate.
10. PT Brantas Abipraya (Persero)
PT Brantas Abipraya (PERSERO) was established on 12 November 1980. This was
derived from an expansion of The Main Project of River Development of Kali
Brantas. The idea of expansion was initiated by Minister of Public Work and
Electricity at that time. Pt Brantas Abipraya (PERSERO) was proclaimed the only
state-owned construction company as the most obedient tax payer in 2008-2012
DOING BUSINESS IN INDONESIA | 81
by Ministry of Finance. Meanwhile, in 2010, the company was awarded by Info
Bank Magazine to be the state-owned and construction company, based on the
business performance growth and financial ratio.
In 2012, PT Brantas Abipraya invests in a new investment in Mini Hydroelectric Power
Plant as one business diversification called Brantas Energy as a part of the subsidiary
company. At present, PT Brantas Abipraya (Persero) is known as a general
construction company not only handles irrigation projects, but also has undertaken
prestigious projects located within and outside the country, such as dams, tunnels,
roads and bridges, airports, buildings, power plants, and many efforts have been
made to the product diversification through the establishment of subsidiaries.
11. PT Bangun Cipta Kontraktor
BCK was established on 17 October 1977 as a subsidiary of the BTS group of
companies, serving the construction industry with the building of high-rise
skyscrapers, office buildings, harbour piers, dams, irrigation structures, bridges, roads
and other civil engineering works. he scope of BCK total service begins with a
project's engineering design, followed by its construction analysis, quality
management and finally, project execution. Implemented by BCK on its own or in
cooperation with local and overseas companies.
The construction industry demands highly reliable team work and equally qualified
management. BCK is one of the few construction companies in Indonesia capable
of carrying out total projects, from the drawing table through to the finishing
touches of a building or other special structure. At present BCK is expanding its
business into real estate, hotels, and the concession of potable water supply.
12. PT Nindya Karya (Persero)
PT NINDYA KARYA(Persero) is State-Owned Enterprise in Construction Services that
has a long history and experience in its core business lines in construction services.
DOING BUSINESS IN INDONESIA | 82
Starting from the result of nationalization of the Dutch Company NV Nederlands
Aanemings Maatschappy (NEDAM) Vorheen Firma H.F.Boersma, based on
Government Regulation No. 59 of 1961. Then based on the Government Regulation
No. 11/1972 and Decree of Minister of Finance No. 91/MK/IV/3/1973 and notarial
deed of Kartini Moeljadi SH No. 76, on March 15, 1973 PT NINDYA KARYA was
established as a Limited Liability Company which became PT NINDYA KARYA
(Persero).
With a vision “To be the big five Contractor Company in Indonesia”, PT NINDYA
KARYA (Persero) is committed to improving the performance of the company
through "Nindya Reborn" based on the Government Regulation No. 69 of 2012 by
restructuring the company comprehensively in company's logo, vision, mission, core
values, cultures, finance, organization, HR and systems, in order to become a smart
and knowledge and technology-based company. This commitment is built with a
high spirit for focus on customers and strong desire to produce quality products.
13. PT Nusa Konstruksi Enjiniring
PT Nusa Konstruksi Enjiniring Tbk is Indonesia’s largest independent, non-state-
owned General Contracting Company with construction and engineering as core
business. NKE’s construction & engineering capabilities cover both civil & structural
works. Supplementary to construction as its core business activity, NKE also has
renewable energy, resources and real estate development related business
activities. The company was founded in the early eighties to build high quality &
luxury housing. Since then the scope of works has significantly increased, however
delivering construction projects of the highest quality and standards has prevailed.
Since establishment in 1982, NKE has successfully completed over 134 infrastructure
projects and over 170 building projects, not only in the greater Jakarta region, but
across all Islands of the Indonesian Archipelago. With 30 years of experience PT
DOING BUSINESS IN INDONESIA | 83
Nusa Konstruksi Enjiniring Tbk has built strong professional networks and capable
personnel. Background of the company’s management is rooted in civil
engineering, allowing for a better understanding of the construction industry. PT
Nusa Konstruksi Enjiniring Tbk has a unique approach to overcome complex
engineering problems, which have attributed to its reputation and proven
capabilities as a contractor. In addition, NKE has expertise in comprehensive
estimating, scheduling, purchasing and subcontracting services.
14. PT Wijaya Kusuma Contractors
PT. Wijaya Kusuma Contractors, also known as WKC, is a privately-held Indonesian
building construction company, head-quartered in Jakarta, Indonesia. Since 1971,
their high standards of service, quality, and personal attention to client’s interest
have earned them the privilege to build some of the highest profiled, often one-of-
a kind, projects in Indonesia. They take great pride in the many successful
relationships they have built and sustained over the years with their clients and
associates. From buildings to communities, from business partnerships to long-
term careers. Their diverse portfolio encompasses Hospitality and Leisure,
Residential, Healthcare, Industrial, Museum and Library, Educational, Religious,
Commercial and Retail. PT. Wijaya Kusuma Contractors thrive on challenges and
accomplishment. They set high standards, and continually innovate and improve.
As a result of their motto they strive to implement the Zero Accidents at their project
site since Safety is fundamental to their culture. WKC has earned an industry-
leading record of achieving zero lost-time incidents (2012 Award).
15. PT Tatamulia Nusantara Indah
TATA was established since 1984. Their work experience range from the building of
a simple factory, high-tech chemical plant, office building to a 5 star hotel. With a
vision to be the best contractor for the stakeholder, PT.Tatamulia Nusantara Indah
strives to give the best result to their customer. Subsequently, they are proud that
DOING BUSINESS IN INDONESIA | 84
every project conforms to the standard of quality and they believe that top quality
can only be achieved by exercising total integration at every stage from studying
the design, planning, construction and maintenance. TATA has come a long way.
Starting out in a modest and rented office, they later evolved to be a bigger
organization which enables them to operate in their own building and have
established branch offices in major cities in Indonesia.
6. CONTACT LIST
As in any industry, the construction industry is made up of a myriad of inter-linked
industries which is represented by various public and private entities. In this section,
we take a look at a list of Indonesian companies, government offices and
associations in the construction, building materials, machinery and mining industry.
6.1 List of Association
NO NAMES ADDRESS PHONE NUMBER EMAIL
1.
Asosiasi Kontraktor
Indonesia (AKI) Indonesian
Contractors Association
Wijaya Graha
Puri Blok D-1 Jl.
Darmawangsa
Raya No.2
Jakarta 12160
Tel: +62 21
7200794,
72790672
Fax: +62 21
7206805
2.
Asosiasi Kontraktor
Kontruksi Indonesia
(AKSINDO)Indonesian
Contractor Construction
Association
Jl. Kyai Tapa No.
300 Kel. Grogol
Kec. Grogol
Petamburan
Jakarta Barat
11450
Tel : (021)
56961245
Fax : (021)
5660326
m
DOING BUSINESS IN INDONESIA | 85
NO NAMES ADDRESS PHONE NUMBER EMAIL
3.
Gabungan Perusahaan
Konstruksi Nasional
Indonesia (GAPEKSINDO)
Jl. Minangkabau
No.35F
Manggarai,
Jakarta-Selatan
12970,
Tel: +6221
83787219
Fax +62 21
83787218
4.
Asosiasi Aspal Beton
Indonesia (AABI)
Indonesian Asphalt
Concrete Association
Puri Sentra Niaga
Blok B No.38
Jl. Raya
Kalimalang,
Jakarta 13620
Tel : 021-8626522
Fax : 021-
8626523
5.
Asosiasi Kontraktor
Gedung dan Pemukiman
Indonesia (AKGEPI)
Jalan Prof. Dr.
Latumeten,
Perkantoran Kota
Grogol Blok C
No. 22
Jakarta Barat
Tel: +62 -21-
5600701
Fax: +62-21-
5686236
t.id
6.
Asosiasi Kontraktor Jalan
dan Jembatan Indonesia
(AKJI)
Jl MT Haryono
Kav 52-53
Gedung
Pusdiklat Depkop
Jakarta
Tel: 021-
7919120
Fax: 021-
7991690
d
7. Gabungan Pengusaha
Kontraktor Nasional
(GABPEKNAS)
Association of National
Indonesian Contractor
Jl. Raya Balap
Sepeda No. 61 F
Jakarta Timur
13220
Tel: (021)
47862486
Fax: (021)
4705092
dppadmin@gapebpe
knas.org
DOING BUSINESS IN INDONESIA | 86
NO NAMES ADDRESS PHONE NUMBER EMAIL
8.
Asosiasi Perusahaan
Rekondisi Alat Berat dan
Truk Indonesia (APARATI)
Indonesian Association Of
Heavy Equipment And
Truck Reconditioning
Companies
Jl. Benyamin
Sueb Blok C-2
Kota Baru
Bandar
Kemayoran
Jakarta Utara
14410
Tel: (021) 6407311
Fax: (021)
6415056
9.
Gabungan Perusahaan
Nasional Rancang Bangun
Indonesia (GAPENRI)
Association of Indonesian
National Engineering
Companies
Perkantoran
Buncit Mas Blok B
No.11 Jl.
Mampang
Prapatan Raya
No. 108 Jakarta
Selatan
Tel: (021) 7946375
Fax: (021)
7980554
d
10.
Asosiasi Perusahaan
Pengelola Alat Berat/Alat
Konstruksi Indonesia
(APPAKSI)
Association of Indonesian
Construction Equipment
Hire and Rent
Jl. Kelapa Molek
IV Blok V-2 No.24
Kelapa Gading
Jakarta 14240
Tel: (021)
45846516
Fax: (021)
45846516
11.
Asosiasi Pengembang
Perumahan dan
Pemukiman Seluruh
Indonesia (APERSI)
Gedung Wakita
Karya Jl. Biru Laut
X/Kav 10-A Lt.1
Tel: (021) 8508533
Fax: (021)
8508534
dpp.apersindo@yaho
o.com
DOING BUSINESS IN INDONESIA | 87
NO NAMES ADDRESS PHONE NUMBER EMAIL
Association of Indonesian
House and Real Estate
Developer
12. Asosiasi Produsen Tiang
Beton Pratekan Indonesia
(APTI)
Association of Indonesian
Pole Concrete Producer
TWINKC Centre
Lt. 8 Jl. Kapten
Piere Tendean
No.82 Jakarta
12790
Tel: (021) 7984655
Fax: (021)
7984655
13. Gabungan Pelaksana
Konstruksi Nasional
Indonesia (GAPENSI)
National Contractors
Association Of Indonesia
Jl. Raya
Ragunan No.
C/1, Jatipadang
Ps. Minggu,
Jakarta 12540
Tel: (021)
78847247,
78847248
Fax:
(021)78847251
14.
Assosiasi Kontraktor Lsitrik
Indonesia (AKLI)
The Association Of
Indonesian electrical
Contractors
Komplek
Perkantoran
Kebayoran
Indah Blok B No.
3, Jl. Ciledug
Raya No.10
Jakarta Selatan
Tel: (021)
7268491-2
Fax: (021)
7230329
15.
Asosiasi Kontraktor Air
Indonesia (AKAINDO)
The Association of
Indonesian Water Works
Contractor
Komplek Ruko
Perkantoran Jl.
Raden Saleh
Raya No. 18L
Jakarta 10430
Tel: (021) 3162871
Fax: (021)
3162873
akaindopusat@yahoo.
com
16.
Persatuan Perusahaan
Real Estat (REI)
Rukan Simprug
Indah Jl. Tenku
Tel: (021)
72789105
DOING BUSINESS IN INDONESIA | 88
NO NAMES ADDRESS PHONE NUMBER EMAIL
Indonesian Real Estate
Association
Nyak Arief No. 9B
Kebayoran
Lama, Jakarta
12220
Fax: (021)
72789155
17.
Fiber Cement
Manufacturer Association
(FICMA)
Ruko Golden
Trully D'Best Blok
E 11 Lt. 2 Jl. RS
Fatmawati
Tel: (021)
75910037
Fax: (021)
75910042
18. Asosiasi Semen Indonesia
(ASI) Indonesian Cement
Association
Gedung Irama
Lt. 11 Jl. Rasuna
Said Blok X-1
Jakarta 12950
Tel: (021)
5261105-6
Fax: (021)
5261107-8
.id
19.
Perhimpunan Agen
Tunggal Alat-Alat Berat
Indonesia (PAABI)
Association of Indonesian
Sole-Agents for Heavy
Equipment Agent
Gedung Putra
Kalimantan
Lt.VI/5 Jl. Jend.
Gatot Subroto
Kav. 12 Jakarta
Selatan
Tel: (021) 5277150
Fax: (021)
5277150
20.
Asosiasi Industri Alat Besar
Indonesia (HINABI)
Heavy Equipment
Manufacturer Association
Of Indonesia
Jl. Raya Cakung
Cilincing Km 4
Jakarta 14140
Tel: (021) 4400611
Fax: (021)
4400616
21.
Asosiasi Pengerjaan
Logam dan Permesinan
ASOSIASI (ASPEP)
Jl. Raya Rawa
Buaya No. 6
Jakarta Barat
Tel: (021) 5401188
- 89
Fax: (021)
DOING BUSINESS IN INDONESIA | 89
NO NAMES ADDRESS PHONE NUMBER EMAIL
Indonesian Association of
Metal Work and
Machinery
11740 6191739
22.
Asosiasi Perusahaan
Inspeksi Teknik Indonesia
(APITINDO)
Association of Indonesian
Technical Inspection
Agencies
Epicentrum Walk
Strata Offices,
Komplek Rasuna
Epicentrum
Menteng Atas
Setiabudi
Jakarta Selatan
Tel: (021) 2994
1205 / 9474 7172
Fax: (021) 2994
1206
23.
Asosiasi Industri dan
Perdagangan Mesin
Konstruksi Indonesia
(AIMKI)
Indonesian Association Of
Machine Construction
Industry and Trade
Jl. Griya Jatisari
Tengah I Blok DU
10/15
Jakasampurna,
Bekasi Barat
17145
Tel: (021) 8840729
Fax: (021)
88964721
24.
Association of Indonesian
Steel Structure (APKOBI)
Adhi Graha
Building Lt. 10
(Gedung
Surveyor
Indonesia) Jl.
Gatot Subroto
Kav. 56 Jakarta
selatan 12950
Tel: (021)
57930883
Fax: (021)
57930883
om
25.
The Indonesian Iron and
Gedung
Tel: (021)
executive_director@iisi
DOING BUSINESS IN INDONESIA | 90
NO NAMES ADDRESS PHONE NUMBER EMAIL
Steel Industry Association
(IISA)
Krakatau Steel,
Lantai 4 Jl. Gatot
Subroto Kav. 54
Jakarta Selatan
12950
5235655, 5235501
Fax: (021)
5235651
a.org
26.
Ikatan Arsitek Indonesia
(IAI)
Indonesian Institute of
Architects
Jakarta Design
Center Lt. 7
Jl. Gatot Subroto
Kav. 53,
Slipi, Jakarta
10260
Indonesia
Tel: +62 21
5304715
Fax: +62 2153047
22
27.
Asosiasi Semen Indonesia
(ASI)
Indonesia Cement
Association
Gedung Irama Lt
II E,
Jl. RH. Rasuna
Said Blok X-l
Jakarta 12950
Tel: 5261105-6
Fax: 5261107 - 8
.id
28.
Asosiasi Pertambangan
Batubara Indonesia (APBI)
Indonesian Coal Mining
Association
Menara
Kuningan Lt. 1
Jl. HR Rasuna
Said X-7 Kav. 5
Jakarta Selatan
Tel: 62 21
30015935
Fax : 62 21
30015936
29.
Asosiasi Independent
Surveyor Indonesia (AISI)
d/a Sucofindo
Center Lt III
Jl. Raya Pasar
Tel: 62 21
7983666 Ps. 1344
Fax : 62 21
customer.service@suc
ofindo.co.id
DOING BUSINESS IN INDONESIA | 91
NO NAMES ADDRESS PHONE NUMBER EMAIL
Association of Indonesian
Independent Surveyors
Minggu Kav 34
Jakarta 12780
7986990,7983888
30. Asosiasi Industri Luminer
dan Kelistrikan Indonesia
(AILKI)
Association Of Indonesian
Lighting and Electrical
Industries
Komp.
Perkantoran
Duta Merlin Blok
B-34
Jl. Gajah Mada
No. 3-5
Jakarta 10130
Tel : 62 21
6334158
Fax : 62 21
6335382
dwi_dinamika@yahoo.
co.id
31.
Asosiasi Industri Mesin
Perkakas Indonesia
(ASIMPI)
Indonesian Machine Tool
Industries Association
Jl. R.E.
Martadinata No.
1 E
Jakarta 14430
Tel. : 62 21
6911220,
6911221
Fax. : 62 21
6902158
m
32.
Asosiasi Industri Peralatan
Pabrik Indonesia (AIPPI)
Association of Indonesian
Manufacturing Equipment
Industries
Jl. Cianjur No. 4
Jakarta 10310
Tel./ Fax : 62 21
6398983
33.
Asosiasi Industri Mesin
Perkakas Indonesia
(ASIMPI)
Indonesian Machine Tool
Jl. R.E.
Martadinata No.
1 E
Tel. : 62 21
6911220, 6911221
Fax. : 62 21
m
DOING BUSINESS IN INDONESIA | 92
NO NAMES ADDRESS PHONE NUMBER EMAIL
Industries Association Jakarta 14430
6902158
34. Asosiasi Industri Rekondisi
Mesin & Peralatan
Indonesia (AIRMEPI)
Association of Indonesian
Reconditioned Machine
and Equipment Industries
Jl. Cianjur No.4,
Menteng
Jakarta 10310
Telp. : 62 21
31923528,
31934205
Fax. : 62 21
3917341
35.
Asosiasi Pengerjaan
Logam dan Permesinan
(ASPEP)
Indonesian Association of
Metal Work and
Machinery Manufacturers
Jl. Rawa Buaya
No. 6
Jakarta 11740
Tel. : 62 21
6190745, 5401188
Fax. : 62 21
6191739
36.
Asosiasi Perusahaan
Tehnik Mekanikal dan
Elektrikal (APTEK)
Association of Mechanical
and Electrical Engineering
Companies
Perkantoran
Majapahit
Permai Blok
C/107
JI.Majapahit No.
18-20 Jakarta
Tel. : 62 21
3808767 -
3808768
Fax. : 62 21
3808770
m
DOING BUSINESS IN INDONESIA | 93
6.2 GOVERNMENT BODIES
No Name Address Phone
Number Email
1.
Ministry of Finance
Jl. Lapangan
Banteng Timur
No.2-4
Jakarta 10710
Tel: 021-384
1067
Fax: 021-380
8395
2.
Ministry of Trade
M. I. Ridwan Rais
Road, No. 5
Central Jakarta
10110
Tel: 021-385
8337
Fax: 021-385
8337
3.
Ministry of Public
Work
Ruang Layanan
Informasi Publik
Gedung Utama
Lantai 1
Kementerian
Pekerjaan
Umum
Jalan Pattimura
No.20
Kebayoran Baru
Jakarta Selatan
Tel: 021-739
2262
4.
Ministry of
Manpower and
Jl. Jend. Gatot
Subroto Kav. 51
Tel: 021-522
9285
DOING BUSINESS IN INDONESIA | 94
Transmigration Jakarta 12950 Fax: 021-797
4488
5.
Ministry of Foreign
Affairs
Jl. Taman
Pejambon No. 6
Jakarta Pusat
10110
Tel: 021-344
1508
Fax: 021-380
551
6.
Ministry of Home
Affairs
Jl. Medan
Merdeka Utara
No. 7
Jakarta 10110
Tel: 021-384
0058
Fax: 021-381
1120
7.
Ministry of Industry
Jl. Jend. Gatot
Subroto Kav. 52-
53
Jakarta 12950
Tel: 021-525
6548
Fax: 021-522
9592
8.
Ministry of Energy
And Mineral
Resources
Jl. Merdeka
Selatan 18
Jakarta 10110
Tel: 021-380
4242
Fax: 021-384
7461
9.
National
Construction
Services
Development Board
Jl. Alteri Pondok
Indah no. 82
Kebayoran
Lama Jakarta
Selatan 12160
Tel: +62-21-
7231556, +62-
21-7234482
Fax: +62-21-
7396974
DOING BUSINESS IN INDONESIA | 95
10 State Minister for
Chairperson of The
National
Development
Planning Agency
Jl. Taman
Suropati No. 2
Jakarta 10310
Tel: 021-390
5650
Fax: 021-334
779
11.
State Minister for
Public Housing
Jl. Raden Patah
I No. 1 Lantai 2
Wing 4
Kebayoran Baru,
Jakarta -
Selatan
Tel: 021-739
7727
Fax: 021-739
7727
6.3 LIST OF RELATED AGENCIES
NO NAMES ADDRESS NUMBER EMAIL
1.
Kamar Dagang dan
Industri Indonesia
(KADIN)
Indonesian Chamber
of Commerce and
Industry
Menara Kadin
Indonesia Lt. 29
Jalan HR Rasuna
Said X-5 kav 2-3,
Jakarta 12950 -
Indonesia
Tel: [62-21]-
5274484
Fax: [62-21]
5274331 -
5274332
sekretariat@kadin-
indonesia.or.id
DOING BUSINESS IN INDONESIA | 96
7. CHALLENGES AND ISSUES FACED BY MALAYSIAN CONTRACTORS IN INDONESIA
7.1 Low Level of Investment on Infrastructure
Infrastructure spending has still not returned to pre-Asian financial crisis levels.
According to the World Bank, infrastructure investment has fallen to about 4
percent of gross domestic product from more than 8 percent in 1995 and
1996. The low level of investment is attributed in part to the Government of
Indonesia’s focus on fiscal consolidation and reducing public debt, as well as
the decline in infrastructure spending by the private sector and state owned
enterprises.
The Indonesian Government will need to come to terms with a slow but
sustainable way to increase infrastructure spending to pre-Asian financial
crises levels.
7.2 Complex Procedures
Complex land acquisition procedures have caused suspensions in
infrastructure implementation.
Indonesia’s Parliament recently approved a land-acquisition bill that will
allow the government to accelerate road, port and airport projects, which
serves as an update to the 1961 law which states that only the President can
seize land if owners refuse to sell. The maximum completion time is now set at
583 days for the land acquisition process for public projects. Implementation
of the law may take a much longer period of time and it is not always clear
when and under what circumstances the new law will be enforced. The
implementing agency also suffers from institutional capacity issues.
DOING BUSINESS IN INDONESIA | 97
Reform to the land acquisition regulations is a much needed step in easing
the burden on the state and state entities to develop and build new
infrastructure.
7.3 Slow Decision Making
Coordination of projects that cut across Ministerial jurisdictions or involve a
number of central and sub-national actors slows decision making, and
uncertainty in the legal and regulatory environment serves as a deterrent to
private sector investment.
Lack of capacity and clarity as to who has the power to make decisions
(and when) at the regional and central government levels also contributes to
this trend.
Many development actors report a chronic lack of bureaucratic capacity
with public servants who are poorly-equipped and unfamiliar with managing
large-scale infrastructure tenders. Line Ministries may lack familiarity with new
sector technologies and concepts, which, in turn, contribute to poor project
preparation.
From a human resources perspective, the capacity gaps will require
prolonged and concerted efforts towards improvement. The government in
particular will need to take some good faith steps to mitigate the economic
risk as well as legal and regulatory uncertainty faced by the private sector
and take internal steps to improve the capacity of its own bureaucracy.
DOING BUSINESS IN INDONESIA | 98
7.4 Access to Financing
Access to project financing is a major barrier. Sustainable infrastructure
development demands an excess of resources, both financial and human
resources, and the likes of which the Government of Indonesia cannot
entirely muster on its own. From a financial perspective, this gap in funding is
made worse by weak budget implementation of existing funds.
Inherent in the public-private sector partnerships (PPP) model is the
expectation that the government would not need to provide the entire
project financing package, but unfortunately the model comes without a
clear method for revenue collection to make up for the project costs and
provide profit to the private sector. There is a widespread view that most
projects proposed under the PPP model are not market-ready and lack the
levels of financial feasibility for private sector involvement, if the government
is not willing to offer more to its side of the financing balance.
Absent central government funding, unfortunately local banks are not a
viable alternate route for financing of infrastructure. Given their high rates of
return on consumer and other commercial lending, they appear to have little
interest in the less rewarding market for public infrastructure.
To address the disconnect between existing budget sourced financing and
the ability of the PPP to show potential profit for the private sector, the
Ministry of Finance (MoF) drafted a decree for a new source of funding,
known as the Viability Gap Funding Mechanism. This mechanism plans to
provide funding from the central government to cover upfront project costs
and reduce the budget impact for the regional government. Approved
funding would come in the form of a grant and pay for part of the project
DOING BUSINESS IN INDONESIA | 99
costs. In turn (in theory) the private sector would also have a smaller
financing burden and thus increase the financial feasibility of the project. The
MoF has stated that this funding can cover no more than 40% of the project
costs. The initial draft proposal is a positive development in addressing the
challenge of project financial feasibility but the final decree has not yet been
signed. While a good short to medium term development, the fund again
highlights an underlying reluctance to transfer the cost of infrastructure
projects in particular sectors to the consumer, which will be necessary over
time for more sustainable development. In the short-term, the Indonesian
Government sees the purchasing power parity of the middle class as still
developing and thus low tariffs and other methods of support are used to
incubate this development and block the full blow of project costs to the
consumer.
While the Viability Gap Funding will be the newest mechanism in trying to
stimulate greater private sector involvement in infrastructure, there are
several other existing entities of note that play a role in infrastructure finance:
the 100% state-owned Indonesia Infrastructure Guarantee Fund (IIGF), the
quasi-independent entity referred to as PT IIF, Indonesia Infrastructure
Finance, and the 100% state owned PT SMI (Sarana Multi Infrastruktur). In
addition to the Indonesia Investment Agency nestled in the heart of the MoF,
this system of financing is referred to in the government as 3+1 (IIGF, IIF, PT SMI
+ IIA).
DOING BUSINESS IN INDONESIA | 100
8. STRENGTHS, WEAKNESSES, OPPORTUNITIES, THREATS (SWOT) ANALYSIS
Indonesia is a developing country with a growing economy and many
infrastructure shortcomings, especially in rural areas. Below is a SWOT analysis
to evaluate the Strengths, Weaknesses, Opportunities, and Threats in
venturing into the construction industry in Indonesia.
Strengths
1. Fifth most populous nation on
Earth, with 251 million people
(July 2013 estimate)
2. Relatively cheap labour force
3. Rich in natural resources,
including petroleum, tin,
natural gas, nickel, timber,
bauxite, copper, fertile soils,
coal, gold, silver
Weaknesses
1. Lack of skilled workforce
2. Poor transportation
infrastructure between islands
3. Low level of education, with
school life expectancy of 13
years (primary to tertiary
education)
Opportunities
1. Large market for products and
services
2. Large number of islands, as
the country is and
archipelago of 17,508 islands
3. The public are receptive to
new development and
technology
4. AEC (ASEAN Economic
Community), regional
economic integration by 2015
Threats
1. Issues of corruptions
2. Issues of government red tape
and slow decision making
3. Issues with access to project
financing
4. Competition from other
construction companies from
China, South Korea and Japan
DOING BUSINESS IN INDONESIA | 101
NNootteess