THE LAW NO. 2/2017 ON CONSTRUCTION SERVICE

Law No. 2  year 2017 on Construction Services was enacted and effective to be enforced as of 12 January 2017, as the amendment to the previous Law No.18/1999 which is revoked by this Law No. 2  year 2017.

Some rules under this 2017 Law require implementing regulations which still need to be stipulated within 2 years as of 12 January 2017.  The implementing regulations of the previous 1999 Law, are declared to be still applicable so long as they do not contradict with this Law No. 2  year 2017.

The following are some of the provisions which are the restatement from Law No. 2  year 2017 and some of the new provisions which are the amendment to Law No. 2  year 2017:

- The obligation on the utilization of Indonesian manpower. They are among other things that:

(i) Head of Representative office of Foreign Construction Company (BUJKA) now is required to be Indonesian citizen.

(ii) BUJKA is expressly required to employ more Indonesians workers than foreigners.

(iii) The position of highest leader in construction projects by construction service provider and its sub-con, must be prioritized for Indonesian citizen.

(iv) Foreign workers who is engaged in the construction work/project must be qualified pursuant to the certification from its origin country and must have obtained registration certificate from the authorized institution in Indonesia.

- Every construction company must obtain classification and qualification which manifested in a Company Certificate (Sertifikat Badan Usaha/SBU). In addition to having SBU, Article 31 of the 2017 Law requires construction company which is classified as middle and big scale to register its business experience with the Ministry to obtain Construction-Business Experience Certificate (tanda daftar pengalaman).  

- The construction professionals who take the role as (i) operator, (ii) technician or analyst and/or (iii) expert, must obtain a Working Competence Certificate (Sertifikat Kompetensi Kerja) from the authorized institution and Construction-Work Experience List’ (Tanda Daftar Pengalaman Profesional) from the Ministry .

- The construction contract must stipulate among other, the following provisions:

(i) The obligation of the contractor to employ construction professionals having a Working Competence Certificate (Sertifikat Kompetensi Kerja);

(ii) Protection to the third parties other than the parties of the contract and workers, in case of  the construction events resulting in loss, accident, and/or death; 

(iii) Guarantee on third party liability due to the construction’s risks and liabilities or construction’s failure; and

(iv) If the construction contract is conducted by  a foreign party,  the contract must stipulate the provision on obligation of transfer of technology.

 

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