Construction Business License in Indonesia: What Foreign Investors Should Know

Expanding into Indonesia’s booming construction industry can be highly rewarding, but it also presents unique regulatory challenges. Many foreign companies in sectors such as architecture, interior design, and construction services are drawn to Indonesia’s infrastructure drive and large market potential.

A common scenario: A foreign investor wants to set up a construction or design business in Indonesia, but quickly discovers that forming a PT PMA (foreign-owned limited liability company) requires a substantial minimum capital investment—often beyond their immediate plans. Instead of halting expansion, a more practical solution emerges: establishing a Representative Office under a BUJKA license.

This article provides an in-depth overview of construction business licensing in Indonesia, the role of BUJKA for foreign contractors, and how the KBLI risk-based system under GR No. 28/2025 shapes licensing requirements.

Why Construction Business Licensing Matters in Indonesia

A construction business license is not just a formality; it is the legal backbone of operating in Indonesia’s construction sector. Without the right license, companies cannot:

• Sign contracts with clients or government entities.
• Participate in tenders for infrastructure projects.
• Hire workers legally, especially foreign engineers or experts.
• Access tax benefits or project financing.

Indonesia’s construction sector contributes significantly to national GDP. According to Statistics Indonesia (BPS), construction accounted for around 10% of GDP in 2024, driven by infrastructure projects, urban development, and private sector growth. This makes the country one of Southeast Asia’s most promising destinations for construction and design businesses.

Overview of Construction Licensing Framework

Foreign and local companies must navigate Indonesia’s structured licensing framework. The main categories are:

1. SBU (Surat Badan Usaha) – a certification for local construction companies, issued by authorized associations, confirming technical and financial capability.
2. BUJK (Badan Usaha Jasa Konstruksi Lokal) – a local construction entity registered under Indonesian law, fully owned by Indonesian citizens.
3. BUJKA (Badan Usaha Jasa Konstruksi Asing) – a foreign construction representative office, allowing overseas companies to operate in Indonesia under specific restrictions.

Each license carries different requirements, rights, and limitations. For foreign contractors, BUJKA is often the most realistic entry point.

BUJKA: A Gateway for Foreign Construction Companies

The BUJKA license allows foreign construction service providers to establish a representative office in Indonesia. Unlike a PT PMA, BUJKA does not require a large paid-up capital injection, but it comes with restrictions:

• Scope of Work: BUJKA may only handle large-scale, complex, and high-value projects, and must operate in joint operation (JO) with a local Indonesian construction company (BUJKN).
• Ownership: It does not constitute a full-fledged company but rather a representative office of the foreign parent company.
• Requirements:
  • Proven track record of large-scale projects overseas.
  • Financial capability to support big-ticket projects.
  • Appointment of a representative in Indonesia.
  • Technical certification, such as SKA (Sertifikat Keahlian) for engineers.

This makes BUJKA a practical solution for foreign firms wanting market access without meeting PT PMA’s strict capital requirements.

KBLI and Risk-Based Licensing

Indonesia reformed its licensing system under the Risk-Based Approach (OSS-RBA), aligning permits with the level of business risk. The legal foundation is Government Regulation (GR) No. 28/2025, which updates earlier frameworks.

Under this system, business activities are classified in the KBLI (Klasifikasi Baku Lapangan Usaha Indonesia). Each KBLI code determines:

• Whether the activity is low, medium-low, medium-high, or high risk.
• What type of license or certification is required.

For construction services, BUJKA is categorized as a medium-high risk activity. This means:

• Companies must secure not only a Business Identification Number (NIB) but also a Standard Certificate issued after verification by relevant authorities.
• The licensing process is more stringent than for low-risk activities, requiring compliance with technical and professional standards.

📌 Reference: Ashurst – Streamlining Business Licensing in Indonesia: GR 28/2025

PMA vs Representative Office with BUJKA

Foreign investors often face a choice between forming a PT PMA or establishing a representative office with a BUJKA license.

PT PMA or Foreign-owned Limited Liability Company 

• Advantages: full ownership, broader scope, long-term presence.
• Disadvantages: requires IDR 10 billion in investment, longer incorporation process.

BUJKA Representative Office

• Advantages: lower entry barrier, access to large-scale projects, compliance with medium-high risk KBLI.
• Disadvantages: cannot operate independently; limited to joint projects with local BUJKN.

For companies testing the waters or focusing on mega-projects, BUJKA can be a strategic alternative before transitioning to a PT PMA.

Compliance and Ongoing Obligations

Securing a BUJKA license or other construction permits is not the end of the journey. Foreign companies must also:

• Submit surveillance reports for construction projects here in Indonesia periodically to the authorities.
• Pay applicable taxes, including Corporate Income Tax and VAT.
• Ensure compliance with BPJS Kesehatan and BPJS Ketenagakerjaan for employees.
• Maintain valid professional certifications and renew licenses when required.

Failure to comply can result in fines, suspension, or revocation of licenses.

Best Practices for Foreign Investors

To maximize opportunities and reduce risks, foreign construction firms should:

1. Conduct a Feasibility Study – Understand market demand, legal barriers, and project feasibility before choosing between PT PMA and BUJKA.
2. Partner with Reliable Local Companies – A strong BUJKN partner is essential for winning large-scale projects under BUJKA.
3. Prepare Technical Documentation Early – Including SKA/SKT certifications, project portfolios, and financial statements.
4. Consider Hybrid Approaches – Some companies begin with BUJKA for entry, then transition to PT PMA for broader operations.

Business Hub Asia offers end-to-end consulting, helping investors select the right entry path, manage compliance, and build sustainable partnerships in Indonesia’s construction sector.

Start your first step to obtain a Construction Business License in Indonesia now

Entering Indonesia’s construction market offers immense potential, but requires navigating a complex licensing environment. From PT PMA to BUJKA under KBLI medium-high risk classification, the choice of license determines your ability to participate in projects and comply with national regulations.

The right license is more than compliance, but also a strategic decision that shapes your market entry and long-term growth.

Partner with Business Hub Asia for expert guidance on applying for a construction business license in Indonesia, BUJKA registration, and compliance solutions. Contact us today for a free consultation.