The steps in setting up a construction company are as follows:
- Find local companies to partner with
Since Indonesia’s law declared that foreign investment can only reach 67% of shares, foreign investors must find a local company (which must be a company, not an individual) to hold 33% of shares.
The partner must be a purely local company, some may ask that is it possible to use a construction holding company to hold 33% of the shares to complete the joint venture, Indonesian law declared that the proportion of foreign investment cannot more than 67%, which means that the upper limit calculated through transmission shareholding does not more than 67%.
In addition, local companies must have B1 or B2 construction qualifications, which is a very high requirement, and there are not many local companies in Indonesia can obtain B-level qualifications, which is the most difficult part of setting up a construction company.
- Define the scope of business, register the company
The types of construction companies mentioned above belong to broad categories, and there are many subcategories under each broad category, and when applying for construction qualifications, you need to be precise about the subcategories, so these should be selected when registering the company. For example, construction services have subcategories such as BG, BS, etc. There are also more detailed classifications within the subcategories, for example, BG has BG001, BG002, etc. Determining which subcategory your company belongs to, this needs to be based on the type of business you want to engage in. You can consult with us to avoid mistakes.
Registering a company also needs to determine the percentage of shares, board of directors, commissioners, company name and address. The company registration will take about 2-3 weeks, and upon completion, you will obtain an inactivated business license.
After the company registration procedure are completed, you can apply for a construction qualification.
- Obtain Construction Association Membership (KTA)
Indonesia’s law requires all construction companies to join an association, and to join an association you have to pay a fee, association fees are unvaried, large associations charge high fees, small associations charge lower fees, you have to pay annual dues after joining the association to get a membership certificate (KTA / Kartu Tanda Anggota).
There are more than seventy construction associations in Indonesia, which are divided by business type, such as GAPENRI association for EPC services, INKINDO association for construction consulting, etc. Shan Hai Map has established good relationships with more than ten of the most well-known associations in Indonesia, and we will advise you on which association is suitable for your business.
- Apply for Expertise Certificate (SKK)
Based on the scope of business you choose in applying for qualifications must have a related certificate or business license, the construction industry is a highly technical industry, such requirements are indispensable. Specifically, how many technical specialists you need and what level of technical specialist you need depends on the experience range you choose and the level of qualification you are applying for.
Example: The registered business scope sub-categories are BG003, BG005, BG006, which requires 1 BG person in charge of classification + 1 person in charge of the business entity.
- Register a SBU and apply for a business license (IUJK)
After registering for KTA and SKK, you can apply for an SBU, which will be labelled with your sub-category and service type. SBUs are issued by the Indonesian Construction Services Development Agency (LPJK).
After registering a SBU, you can apply for an IUJK, and after that you can officially start your business.
Conclusion: The procedure for setting up a construction company is not complicated, the difficulty is in finding local partners; it is more complicated to apply for qualifications after setting up a company, because the scope of business involved is very detailed, and Shan Hai Map has carried out various sharing forums about this. If you have any further questions, you can consult with us.