Learn how to become a contractor in Bali and Lombok

In Bali and Lombok, tourism businesses claim fame. Property developments are in progress. Hotels, resorts, and villas can be found in every corner of the city; small or large projects are tempting to build. This has sparked interest in becoming a contractor in Bali, but many are unaware of the strict regulations and requirements within the construction industry. The specific guide will provide the main steps and peculiarities of working in these culturally and economically lively regions.

Construction Market Overview

The construction sector in Bali and Lombok is not just growing—it’s thriving! Despite the highly regulated nature of the construction industry, it remains one of the most promising business opportunities. Scaling from small to big industries, private or government projects, both are as much as interested to do. 

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Types of construction services.

Building a resort, hotel, or even a small house requires preparation. We start by making a drawing, managing the budget, and lastly, building. This process type, known as construction, can be classified into several categories:

1. Construction Consultation Services 
2. Construction Work Service 
3. Integrated work between construction, consultation, and work service 

Construction Consultation Services

Companies that involve tasks such as drafting, project management, engineering, landscape design, assessment, and planning will be considered as consultants for construction companies.

There is also a special consultancy that provides scientific and technical analysis. 

Construction Work Service

This type of construction involves a combination of construction, maintenance, demolition, and reconstruction processes. Essentially, once the planning phase is completed, the construction phase begins. The contractor must align the construction with the consultants’ planned building. 

Integrated Construction

An integrated refers to a company that performs both building and civil construction tasks, including design, engineering, and procurement, all under one roof. Many foreign companies choose this classification when they are involved in government projects. 

Steps to Becoming a Contractor in Bali and Lombok

Navigating Indonesia’s complex legal system is a key step for those looking to work as a contractor in Bali or Lombok. As a foreigner or foreign company, you cannot just simply become a contractor; you have to structure your business. Once you have understood the concept of type of construction, here are the steps you need to take.

1. Form a Foreign Construction Business Entity

Construction services can be provided by an individual or a corporation. For foreign construction service providers, however, there are various restrictions on starting their firm. A foreign company offering building services that can only conduct business in Indonesia has options such as the following:

1. BUJKA (Badan Usaha Jasa Kontruksi Asing) solely offers high-risk, high-tech, high-cost market segments, starting with consultations (engineering/design) and/or monitoring and supervision services and restricted construction services. An Indonesian national or foreigner with a proper work permit (KITAS) and the necessary certificates can lead BUJKA. BUJKA also has to coordinate a combined effort with accredited national business associations. The benefit of setting BUJKA is that you do not need to inject paid-up capital, and this can be a beneficial strategy for participating in government projects. 
2. PT PMA: Foreign Investment Company. PT PMA is limited to classification B (BIG), either for planning, major corporations, or project implementers with project values greater than 100 billion. Forming the company as a Limited Liability Company (PT), it must have a maximum foreign share ownership of 67% for non-ASEAN nations and 70% from ASEAN countries. You have to find a local partner to hold the 30%, and the local partner must have a B classification as well. 

2. Getting the Right Licenses

The Regulation of the Minister of Public Works and Public Housing No. 8 of 2022 outlines the procedures for fulfilling standard certificates in the construction services sector, aiming to facilitate business licensing for construction service entrepreneurs. Below is a detailed breakdown of the licenses required for Badan Usaha Jasa Konstruksi Asing (BUJKA) and Perseroan Terbatas Penanaman Modal Asing (PT PMA) as stipulated in this regulation. 

Badan Usaha Jasa Konstruksi Asing (BUJKA).

To legally conduct business, BUJKA must establish a representative office known as Kantor Perwakilan Badan Usaha Jasa Konstruksi Asing (KP BUJKA). The licensing requirements include:

• Establishment of Kantor Perwakilan BUJKA: Foreign construction companies must set up a representative office in Indonesia to oversee their operations.
• Obtainment of Business Identification Number (NIB): Through the Online Single Submission (OSS) system, BUJKA must acquire an NIB, which serves as a unified business identity.
• Getting the Construction Service Business License (IUJK) wallow let BUto JKA provide Indonesian construction services.
• Possession of a Standard Certificate: BUJKA is obliged to have a Standard Certificate comprising:
  • Sertifikat Badan Usaha (SBU) is a certificate attesting to the classification and qualification of the corporate body in building services. Please note that SBU will be a with the ed with the sub-classification that will be performed by the BUJKA.
  • Sertifikat Kompetensi Kerja (SKK): Certificates for personnel, ensuring that key staff meet Indonesian competency standards. The certifneedse nebe signedo have by someone you will hire in the BUJKA.
  • Membership in a Construction Association (KTA): BUJKA must register with a recognised construction association in Indonesia, such as the Gabungan Pelaksana Konstruksi Nasional Indonesia (GAPENSI) or other relevant associations. Membership ensures adherence to professional and ethical standards in the construction industry.

PT PMA (Penanaman Modal Asing)

For foreign investors aiming to establish a construction business, the following licenses are required:

• Company Establishment: Formation of a PT PMA through a notarial deed, followed by approval from the Ministry of Law and Human Rights.
• Tax Registration: Registration for a Taxpayer Identification Number (NPWP) and compliance with Indonesian tax regulations are essential.
• Business Identification Number (NIB): Registration via the OSS system to obtain the NIB, which functions as the company’s primary business license.
• Standard Certificate: Similar to BUJKA, a PT PMA must obtain:
  • Sertifikat Badan Usaha (SBU): Certifying the company’s classification and qualifications in construction services.
  • Sertifikat Kompetensi Kerja (SKK): Ensuring that the company’s personnel possess the necessary competencies.
  • Membership in a Construction Association: PT PMA must become a member of an accredited construction association such as INKINDO. This membership helps you stay on top of industry standards and boosts your credibility in the market.

Additional License 

If you’re a contractor, just keep in mind that there’s another licence you need to grab before kicking off any building, like the PBG (Persetujuan Bangunan Gedung). You really need this approval for any construction project you want to start. The PBG took over from the old IMB (Izin Mendirikan Bangunan) and is all about making sure buildings meet safety standards, zoning rules, design, and environmental guidelines.

What documents are needed to get the necessary licenses?

To operate as a contractor in Bali, obtaining the proper licenses is essential. After securing either a BUJKA or PT PMA license, the next step is acquiring the SBU (Sertifikat Badan Usaha). Here’s what you’ll need:

1. Deed of Establishment (AKTA)
2. Approval from the Ministry of Law and Human Rights (SK KEMENHUMKAN)
3. Tax Identification Number (NPWP)
4. Business Identification Number (NIB)
5. Organisational Structure
6. Personnel Competency Certificates (SKK)
7. Financial Statements (2 years and audited) for BUJKA. This has to come from the parent company. 
8. Proof of Construction Experience: for BUJKA, it has to be a of minimum 100 billion IDR project value.

Once the SBU is issued, the next step is to get the Sertifikat standard d as a construction service, and you can lead doing business as a contractor.

Also read: 7 Best Business Opportunities In Bali

Challenges you will find and how to tackle them

Let’s be real, becoming a contractor is not an easy job; at least you will have challenges such as:

• Building a team: it is important to have a team that is skilled and knows how to do the job.
• Cultural problems: Bali and Lombok are not only beautiful but also challenging to their traditions, so please adapt accordingly.
• Government procedures can be delayed bureaucratically. Patience is absolutely vital. Do you want to thrive in the business? Embrace local alliances. Working with seasoned builders will get you ahead.

Becoming a contractor in Bali and Lombok isn’t a quick race; it’s more like a long-distance run. From negotiating rules to developing a network, the process calls for both courage and ready flexibility. Once you are established, though, the benefits are great. With those steps that you need to take, let ILA simplify your legal journey, starting with choosing which business entity benefits you or how to look for a local partner. To discuss further, book a meeting with our consultant.