Major State-Owned EPC (Refer To P.69)

DOING BUSINESS IN
A Construction Perspective
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: international@cidb.gov.my
DOING BUSINESS IN INDONESIA | 1
Foreword
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
Doing Business in Indonesia:

Board Malaysia as to accuracy, authenticity or

completeness. No warranty, express or implied, is
being made or will be made Construction Industry
Development
accuracy
or
Board
Malaysia
adequacy
of
as
the
regards
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).
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).
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: international@cidb.gov.my
CONTENTS
Doing Business in INDONESIA
Map of Indonesia
Malaysia & Indonesia : At A Glance
Introduction
10
Background on Indonesia
12
2.1
The Country
12
2.2
General Economic Development and Status
13
2.3
15
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
3.2.1
42
Banking System
42
3.3
3.4
3.5
3.2.2
Method of Payment
44
3.2.3
Cost of Doing Business in Indonesia
45
3.2.4
Project Financing
46
Manpower
52
3.3.1
Labor Resources
52
3.3.2
Wages Rates
53
Materials
56
3.4.1
56
List of major building materials suppliers and

their contact address
Machinery
61
3.5.1
62
List of building materials suppliers and their

contact address
Potential Business Opportunities
65
4.1
Listing of some potential projects opportunities
65
4.2
Networking channels
67
List of Top 15 Contractors in Indonesia for Joint Venture

Possibilities
69
List of Local Associations/Construction Bodies/Construction

Related Agencies or Ministries in Indonesia
84
Challenges and Issues Faced by Malaysian Contractors in

Indonesia
96
Strengths, Weaknesses, Opportunities, Threats (SWOT)

Analysis
100
M a p o f IN D O N E S IA
IN D O N E S IA & M A L A Y S IA : A T A G L A N C E
Malaysia
Indonesia
329,847 sq km
1,904,569 sq km
Population:
29,628,392 (July 2013 est.)
251,160,124 (July 2013 est.)
Urban
72.8% of total population
50.7% of total population
(2011)
(2011)
2.49% annual rate of change
2.45% annual rate of change
Urbanization:
(2010-15 est.)
(2010-15 est.)
Major Urban
KUALA LUMPUR (capital) 1.493
JAKARTA (capital) 9.121
Areas -
million; Klang 1.071 million;
million; Surabaya 2.509 million;
Population:
Johor Bahru 958,000 (2009)
Bandung 2.412 million; Medan
Area:
population:
Rate of
2.131 million; Semarang 1.296

million (2009)
Capital:
Administrative
Divisions:
Kuala Lumpur
Jakarta
13 states (negeri-negeri,
31 provinces (provinsi-provinsi,
singular - negeri);
singular - provinsi), 1
Johor, Kedah, Kelantan,
autonomous province*, 1
Melaka, Negeri Sembilan,
special region** (daerah-
Pahang, Perak, Perlis, Pulau
daerah istimewa, singular -
Pinang, Sabah, Sarawak,
daerah istimewa), and 1
Selangor, Terengganu; and 1
national capital district***
federal territory (Wilayah
(daerah khusus ibukota);
Persekutuan) with 3
Aceh*, Bali, Banten, Bengkulu,
components, Kuala Lumpur,
Gorontalo, Jakarta Raya***,
Labuan, and Putrajaya
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),
Sumatera Selatan (South

Sumatra), Sumatera Utara
(North Sumatra), Yogyakarta
GDP
US$506.7 billion (2012 est.)
US$1.237 trillion (2012 est.)
5.6% (2012 est.)
6.2% (2012 est.)
US$17,200 (2012 est.)
US$5,100 (2012 est.)
12.9 million (2012 est.)
118.1 million (2012 est.)
3% (2012 est.)
6.1% (2012 est.)
US$67.31 billion
US$164 billion
Expenditures:
Inflation Rate
1.7% (2012 est.)
4.3% (2012 est.)
(Purchasing
Power Parity):
GDP - Real
Growth Rate:
GDP - Per
Capita (PPP):
Labor Force:
Unemployment
Rate:
Revenues:
(Consumer
Prices):
EASE OF DOING BUSINESS RANKING

Malaysia
Indonesia
Ease of Doing Business Rank
120
Starting a Business
23
Dealing with Construction Permits
16
Getting Electricity
17
Registering Property
15
Getting Credit
14
Protecting Investors
Paying Taxes
24
Trading Across Borders
Enforcing Contracts
19
Resolving Insolvency
18
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 worlds 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.
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 worlds 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 Indonesias 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 Indonesias
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.
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 Indonesias 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.
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 debtto-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
Indonesias 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 Asias 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, Indonesias
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.
Indonesia is a thriving democracy with significant regional autonomy. It is

located on the worlds 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
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
GDP at Current Market Price By Industrial Origin (Billion Rupiahs/ Billion US$),
2006-2012
Industry
2006
2007
2008
2009
Construction
251,132.30 304,996.80 419,711.90 555,192.50 660,890.50
US$
20.82
25.29
Industry
2011
2012
Construction
754,483.50 860,964.80
US$
62.56
34.80
2010
46.03
54.80
71.39
Growth Rate of Gross Domestic Product at 2000 Constant Market Prices By

Industrial Origin (Percent), 2006-2012
Industry
2006
Construction 8.34
2007
2008
2009
2010
2011
2012
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.
Percentage Distribution of Gross Domestic Product at Current Market Prices

By Industrial Origin, 2006-2013
Industry
2006
Construction 7.5
2007
2008
2009
2010
2011
2012
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$)
Type of
Construction
Building
2006
2007
2008
2009
2010
2011
31,374,730
34,612,257
33,078,407
71,472,060
93,705,954
107,417,601
2,601.55
2,870.00
2,742.81
5,926.37
7,769.97
8,906.92
26,049,107
28,615,500
46,241,921
137,098,864
164,791,068
199,260,546
2,159.95
2,372.76
3,834.32
11,368.06
13,664.26
16,522.43
14,519,472
18,447,216
22,695,272
47,057,295
54,675,972
63,699,771
1,203.93
1,529.61
1,881.86
3,901.93
4,533.66
5,281.90
71,943,309
81,674,973
102,015,600
255,628,219
313,172,994
370,377,918
5,965.44
6,772.38
8,459.00
21,196.36
25,967.91
30,711.27
Construction
US$
Civil
Construction
US$
Specialized
Construction
US$
TOTAL
US$
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.
One of the issues that the Government has to address is the unbalanced
demand-supply of heavy equipments. 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
1
Description
Unit
2008
2009
2010
2011
2012
Total Number
Person
102.5
104.9
108.2
109.7
110.8
of workforce
(million)
5.44
5.49
5.59
6.34
6.79
5.31
5.23
5.17
5.78
6.13
(all sectors)
2
Construction
Person
Sector
(million)
Portion of total
Education Level of Construction Workforce

Elementary
54
52
52
52
52
High School
42
44
44
44
44
University /
School
Diploma
4
Certified Construction Workforce (% from total workforce)

Certified Skilled
2.68
3.82
6.47
6.31
9.17
1.14
1.83
2.20
2.03
1.91
labour
Certified
experts
Infrastructure Fund By Central Government

18
17
16
16
14
USD, Billion
12
9.6
10
8.3
8
5.7
6
4
10.5
6.3
2.7
2
0
2005
2006
2007
2008
2009
2010
2011
2012
Year
USD, Billion
National Construction Market Data

45
40
35
30
25
20
15
10
5
0
40.3
32.4
21.8
18.4
16.1
2009
2010
2011
Year
2012
2013
Materials and Equipment Demand for Infrastructure Projects

Item
2010
2011
2012
2013
2014
Cement
8.6
12.3
13.7
13.9
16.0
3.4
4.8
5.3
6.0
7.0
0.8
1.2
1.3
1.7
2.0
26.4
37.8
42.0
50.4
60.5
(Mil. MT)
Steel (Mil.
MT)
Asphalt
(Mil. MT)
Heavy
Equipment
(Thou, MT)
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.
However, the vast majority of these companies are classified as being smallsized 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 Indonesias 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
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
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
Email: info@bkpm.go.id
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
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 costeffective 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
PT PMA
PT Local
Based on home
Can be any
Can be any
country company
name, as long as
name, as long as
name
it is not already in
it is not already in
use
use
No Equity
Depending on
No foreign
owned by
industry, foreign
ownership
home country
ownership can be
allowed. Must be
company
up to 100%
100% Indonesian
No revenue
Revenue allowed
Revenue allowed
Office
Name of entity
Ownership
Restriction
Representative
PT PMA
PT Local
Based on
Generally no
Investment in
Negative List. Not
except where
industry
all industries open
certain industries
for foreign
require domestic
investment. If yes,
investment
can also have
approval.
Office
revenue
allowed. Only as
marketing office
and costs allowed
Restriction
Not applicable
restriction on
shareholding
including joint
ventures.
Approval required
Yes BKPM
Yes BKPM
No except in
for setting up?
(Investment
(Investment
certain industries
Coordinating
Coordinating
Board)
Board)
Not applicable
Minimum one,
Board of
Commissioners
Board of Directors
Minimum one,
foreigners allowed foreigners allowed

Not applicable
Minimum one,
Minimum one,
foreigners allowed foreigners allowed

Investment & paid
No paid up
Minimum
Paid up generally
up capital
capital required
investment USD
RP 50 million / USD
250,000 or paid up 5,500

capital of USD
100,000
Reporting
Yes
Yes including
No except under
Representative
PT PMA
PT Local
requirements
periodic reporting
domestic
investment?
and subsequent
investment
application for
approach
Office
permanent
operating license
Open bank
Yes
Yes
Yes
Foreigners
Foreigners
Foreigners
allowed if KITAS
allowed if KITAS
allowed if KITAS
holder or director
holder or director
holder or director
or komisaris
or komisaris
or komisaris
Yes
Yes
Yes
Fiscal incentive?
Yes
No
No
Purchase assets
Yes
Yes
Yes
Other incentives?
None
Importation /
None
account
Bank signatories
Work permits
allowed?
Master List
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 agencys goal is not only to seek
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 projects
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)
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
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:
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)
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
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
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.
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 15%

(US$0.0041 million to US$0.207 million)
Over IDR 250 million to IDR 500 million
25%
(US$0.207 million to US$0.0415 million)

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 5 % Lower than normal rate

shares trade in stock exchange market
Gross turnover up to IDR 50.000.000.000 50 % deduction from normal
(US$4,145,592.02)
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.
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
Brunei Darussalam
Mexico
Hungary
Korea,
Slovakia
Pakistan
Romania
United States of America
Sweden
Tunisia
Finland
Australia
Bangladesh
Mongolia
India
Russia
South Africa
Qatar
Turkey
Uzbekistan
Switzerland
Canada
Egypt
Austria
Kuwait
Netherland
Italy
Saudi Arabia
Spain
The Philippines
Ukraine
Venezuela
Syria
Czech Republic
France
Belgium
Luxembourg
New Zealand
Japan
Seychelles
Sri Lanka
Poland
United Arab Emirates
Vietnam
Taiwan
China
German
Bulgaria
Malaysia
Norway
Jordan
Singapore
Sudan
Portugal
United Kingdom
Thailand
Denmark
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.
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:
Physical (Tangible)
Useful Life
Method of Calculation
Asset
(years)
Straight Line (%)
Double Declining
Balance (%)
l. Non Building
Group 1
25
50
Group 2
12.5
25
Group 3
16
6.26
12.5
Group 4
20
10
Permanent
20
Non-Permanent
10
10
ll. Building
Amortization
Non-Physical
Useful Life (years)
Asset
Method of Calculation
Straight Line (%)
Declining Balance
(%)
Group 1
25
50
Group 2
12.5
25
Group 3
16
6.25
12.5
Group 4
20
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).
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
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.
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.
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 agencys
goal is to help promote access to worldwide markets for Indonesias export-
related commodities, support Indonesias 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 exportrelated 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;
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.
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
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 governments 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 20102014 (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.
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 Banks 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-
national governments to improve infrastructure delivery, and the policy

environment for private infrastructure investment.
The World Bank support of Indonesias infrastructure priorities in its mediumterm 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
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 banks
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
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.
ADBs 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.
As an agency under the purview of the Ministry of Finance, EXIM Banks

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 Banks 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/
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

Indonesias 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
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
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 nonstructural 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%.
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.
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
PT Semen Indonesia
Tel : (62-31) 398
info@semenindonesia.c
Indonesia
(Persero)Tbk
1732, (62-31) 398
om
(Persero)Tbk
Kantor Pusat
1745
Gedung Utama SG
Type of building
Jl. Veteran
Fax : (62-31) 398
materials:
Gresik 61122
3209, (62-31) 397
NO
NAMES
ADDRESS
NUMBER
Cement
Jawa
2264
EMAIL
Timur,Indonesia
2.
3.
4.
PT Semen Tonasa
Lantai 2 Kantor Pusat
Telephone :
customercare@sement
PT Semen Tonasa,
(0410) 312345
onasa.co.id
Type of building
Biringere-Pangkep,
Fax : (0410)
materials:
Sulawesi Selatan
310060
Cement
90651
PT Semen Kupang
Jalan Yos Sudarso,
Tel: 62-380
semen_kupang@telko
Osmo, Tenao
832100
m.net
Type of building
Kotak Pos 37,
62-380-832105
materials:
Kupang
Fax: 62-380-
Cement
Nusa Teggara Timur
832107
PT Semen Gresik
Jalan Veteran No.
Tel: 62-31-
10, Gresik
3981732
61122, Jawa Timur
62-31-981745
Type of building
sjakarta@sg.sggrp.com
materials:
Cement
Fax: 62-313983209
5.
PT Holcim
Indonesia
Jamsostek Tower NorthTel: 62-2152962011

Bldg 14-15 Fl.
Type of building
Jl. Jend. Gatot Subroto

Fax: 62-21No. 38
materials:
Jakarta 12930
info-IDN@holcim.com
52962022
Cement,
concrete, precast
6.
PT Indocement
Wisma Indocement
Tel: 62-21-
corpsec@indocement.
Tunggal Prakarsa
14th Floor
2512121
co.id
NO
NAMES
ADDRESS
TBK
Jalan Jend.
NUMBER
EMAIL
Sudirman Kav. 70-71
Fax: 62-21-
Type of building
Jakarta 12910,
2510060
materials:
Indonesia
Cement,
concrete,
aggregates
7.
PT Semen Baturaja
Jalan Abikusno
Tel: 62-771-
Cokrosuyoso
511261
Type of building
Kertapati,
materials:
Palembang
Fax: 62-771-
Cement
Sumatera Selatan
512126
30001
P O Box 1175
8.
PT Semen Andalas
Jalan Raya Lhok
Tel: 62-651-22571
Indonesia
Nga
Type of building
Km. 16, P O Box 30,
Fax: 62-651-
materials:
Banda Aceh,
44101
PT Semen Bosowa
Jalan Urip Sumoharjo
Tel: 62-411-
Maros
No 188
444444
Type of building
P O Box 273, Ujung
materials:
Pandang,
Fax: 62-411-
Cement
Sulawesi Selatan
447744
PT Semen Padang
Indarung Padang
Tel: (0751)
25237, Sumatera
815250
Type of building
Barat
Fax. 0751-815590
materials:
Telp. (0751) 815250;
Cement
08126611910 (gsm)
Sepaja@indosat.net.id
Cement
9.
10.
Fax. 0751-815590
NO
NAMES
ADDRESS
NUMBER
EMAIL
Fax. Marketing 0751815001
11.
CV. Putra
Ruko Bunga Raya
Pundarika
Blok B No. 16
Tel: 77 8733 6875
Kelurahan Belian
Type of building
Kecamatan Nongsa
materials:
Batam Centre, Pulau
Paint, Electrical,
Batam
Piping, etc
12.
PT Arwana
Ruko Sentra Niaga
Citramulia Tbk
Puri Indah, blok T2-
Tel: 5830 2363
24, Jalan Puri Indah

Type of building
Raya, 11610
materials:
Ceramic tiles
13.
PT Bhineka Ciria
JL. Arteri Mangga
Tel: (+6221) 601
Artana
Dua Block F-6 No. 1
1719 - 20
help@bhinekaciria.com
Pusat Perdagangan
Types of building
Bahan Bangunan
Fax: (+6221) 601
materials:
dan Interior
6985
Door, locks, glass
Jakarta 10730 INDONESIA
14.
PT Cipta Mortar
Menara Sudirman
Tel: (62-21) 522
Utama
Lantai 11
6619
Jl. Jendral Sudirman

Types of building
Kav. 60, Jakarta
Fax. (62-21) 522
materials:
12160
6629
Cilandak
Tel : +62 21 789
Premixed mortar
15.
PT. Knauf
marketing@knauf.co.id
NO
NAMES
ADDRESS
NUMBER
Gypsum Indonesi
Commercial Estate,
1661
a,
Garden Centre 5th
Fax : +62 21 789
Floor Suite 16(B),
1662
Types of building
JL Raya Cilandak
materials:
KKOJakarta 12560,
Gypsum board,
Indonesia
EMAIL
techteam@knauf.co.id
compound and
plaster, gypsum
tile, metal section
16.
PT Lafarge
Gedung Graha
Cement Indonesia CIMB Niaga,25th
Tel: 62 21 2953
3800
Floor
Types of building
Jl. Jend. Sudirman
Fax: 62 21 2953
materials:
Kav. 58
3801
Cement
Jakarta 12190 Indonesia
17.
PT. Adhimix
Indonesia Graha
Tel: (021) 799
Precast
Anugerah Lt. 3
4666
beton@adhimix.co.id
Jl. Raya Ps. Minggu

Types of building
No. 17 A
Fax: (021) 726
materials:
Pancoran Jakarta
8669
Readymix
Selatan 12780
concrete, precast
concrete
18.
PT BangunPerkasa
Graha GRC board
Tel: (62-21)
Adhitamasentra
Lt.3
53666800
Jl. S.Parman Kav.64

Types of building
Jakarta 11410 -
Fax : (62-21)
materials:
Indonesia
53666720
NO
NAMES
ADDRESS
NUMBER
EMAIL
PT. Maccaferri
Aminta Plaza 2 nd
Tel: (62-21) 750
mi@maccaferri.co.id
Indonesia
floor, suite 204
6555, Fax : (62-
Jl. TB Simatupang
21) 750 6553
Glass fibre
cement board
19.
Types of building
kav.10 | Jakarta
materials:
12310 Indonesia
wire mesh basket,

woven wire mesh
unit, chainlink, etc
20.
PT. Jaindo Metal
Jl. Soekarno Hatta
Tel: +62-22-
headoffice@j-
Industries
No.227
6030755
steel.co.id
Bandung 40233
Fax: +62-22-
Types of building
6030165
materials:
Metal roofing,
light steel house
framing, etc.
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.
3.5.1 List of Local Machinery Manufacturers & Suppliers
NO NAMES
ADDRESS
NUMBER
EMAIL
1.
PT Komatsu
Komatsu Indonesia
+62.21 440 0611
Indonesia
Industrial
+62.21 440 0615
Development
Center, Cakung
Cilincing Plant
Jl. Raya Cakung
Cilincing Km. 4
Jakarta Utara 14140
2.
PT Hexindo
Kawasan Industri Pulo Tel. +62-
inquiry@hexindo-
Adiperkasa Tbk
Gadung
(0)214611688
tbk.co.id
Jl. Pulo Kambing II
Fax. +62-
Kav. I - II No. 33
(0)214611686
Jakarta
Indonesia 13930
3.
PT Trakindo Utama
PT Trakindo Utama
Tel: (62-21)
rentalstore@trakindo.co
JL Cilandak KKO
7822373
.id
Raya
4.
Jakarta 12560,
Fax : (62-21)
Indonesia
7817786
PT. Daya Kobelco
Pondok Indah Office
Tel: +62(0)21
info@dayakobelco.co.i
Construction
Tower 3, 15th Fl, Suite
7592 2828
Machinery
1202
Fax: +62(0)21
Indonesia
Jl. Sultan Iskandar
7592 2822
Muda Kav. VTA

Pondok Indah 12310,
Jakarta Selatan
NO NAMES
ADDRESS
NUMBER
EMAIL
5.
PT. United Tractors
Jl. Jababeka XI Blok
Tel: +62 21 893
marketing@patria.co.id
Pandu
H 30 40
5016
Engineering
Kawasan Industri
Jababeka
Fax : +62 21 893
Cikarang 17530
4772/6353
Indonesia
6.
PT Waja Kamajaya
Jl Penggilingan Raya,
+62-21 460 1651
Sentosa
No 99 Jakarta 13940,
+62-21 460 4203
wakasa@cbn.net.id
Indonesia
7.
PT Mitrindo
Jln. Hidup Baru 131
Tel: (021) 6405
sukamaju@mitrindo.co
Dutaprakarsa
Jakarta Utara -
803
Indonesia
Fax: (021) 6471
7908
8.
PT Sanggar
MT Building, 5th Floor,
Tel: +6221 2997
Sarana Baja
Suite 501, Jl. Cilandak
6830
ssb.sales@ptssb.co.id
KKO No.1, Jakarta

12560
+6221 2997
6835
9.
10.
PT. Delimajaya
Jl. KH. Soleh Iskandar
Tel: +62 251 8654
info@delimajayacarross
Carrosserie
No.5
300
erie.com,
Industry
Bogor, Indonesia
Fax:+62 251 8660
16111
273
PT. Universal Tekno
Jl. Raya Bekasi Km.
Tel: +62 21 2457
Reksajaya
22, Cakung Jakarta
6818
13910 Indonesia
Fax: +62 21 4682
sales@utr.co.id
2748
NO NAMES
ADDRESS
NUMBER
EMAIL
11.
PT Sarana Steel
Mechanical Structure
Tel: (021) -
marketing@sse.co.id
Engineering
Fabrication /
46826589
Engineering
Fax: (021) -
Jl. Pulo Kambing II
4609679
No.11, Kawasan
Industri Pulo Gadung
Jakarta 13930 Indonesia .
12.
PT Mitrindo
Jln. Hidup Baru 131
Tel: (021) 6405
sukamaju@mitrindo.co
Dutaprakarsa
Jakarta Utara -
803
Indonesia
Fax: (021) 6471

7908
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
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
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
i.
Networking Channels
Malaysia Club Jakarta
Objectives of Malaysia Club Jakarta (MCJ):
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
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: mwjkarta@indosat.net.id
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
PT Wijaya Karya (Persero) Tbk
Sales 2011
Sales 2012
(million USD)
(million USD)
976.6
1234.2
799.4
917.5
Jl D.I. Panjaitan Kav 9

Tel: (6221) 8192808/ 8508640/
8508650 ext.1917
Fax: (6221) 8191235/ 81999713
Contact: Destiawan
(destiawan@wika.co.id)
www.wika.co.id
2
PT Waskita Karya (Persero) Tbk

Waskita Building
No.
Company/ Contact
Sales 2011
Sales 2012
(million USD)
(million USD)
620.0
800.0
735.7
794.5
375.2
524.8
Jl. MT Haryono Kav 10 Cawang

Tel: (6221) 8508410/20
Fax: (6221) 8508506
(waskita@waskita.co.id)
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
PT Adhi Karya (Persero) Tbk

Jl. Raya Pasar Minggu Km 18
Jakarta 12510 - Indonesia
Tel: (6221) 7975312
Fax: (6221) 7975311
(adhi@adhi.co.id)
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)
No.
Company/ Contact
Sales 2011
Sales 2012
(million USD)
(million USD)
390.0
430.0
353.0
412.0
217.0
260.0
(widisuharyanto2001@yahoo.com)
6
PT Totoal Bangun Persada Tbk

Jl. Letjend. S. Parman no. 106
Jakarta 11440 Indoneisa
Tel: (6221) 5666999
Fax: (6221) 5663069
(totalbp@totalbp.com)
www.totalbp.com
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
(drajat@jayakonstruksi.com/
drajat1964@gmail.com)
www.jayakontruksi.com
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
(ms@multi-structure.com)
No.
Company/ Contact
Sales 2011
Sales 2012
(million USD)
(million USD)
173.8
210.9
124.7
171.7
101.1
170.0
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
(nrc@nusarayacipta.com)
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
(bap@brantas-abipraya.com)
www.brantas-abipraya.com
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
(ptbck@dnet.net.id)
www.ptbck.com
No.
12
Company/ Contact
PT Ninda Karya (Persero)
Sales 2011
Sales 2012
(million USD)
(million USD)
94.2
167.9
120.7
126.7
83.8
116.3
Jl. Letjend Haryono MT

Kav 22 Jakarta Timur 13630
Tel: (6221) 8093276
Fax: (6221) 8093105
Contact: Mr Respati Hari Winarno
(respati.hari@nindyakarya.co.id/
nindyakarya.co.id)
www.nindyakarya.co.id
13
PT Nusa Konstruksi Enjiniring

Jalan Sunan Kalijaga 64, Jakarta
Selatan
Tel: (6221) 7221003
Fax: (6221) 7396580
Contact: Mr Djohan Halim
(corporate@nusakonstruksi.com)
www.nusakonstruksi.com
14
PT Wijaya Kusuma Contractors

info@wkcnet.com
www.wkcnet.com
Contact: Ms Clara Agustina
(6221) 3905658
No.
15
Company/ Contact
PT Tatamulia Nusantara Indah
Sales 2011
Sales 2012
(million USD)
(million USD)
<100
<110
Sapta Mulia Center

Jl. Rawa Gelam V Kav OR-3B
Pulogadung Industrial Estate
Tel: (6221) 4606960
(tatajkt@cbn.net.id)
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. WIKAs 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 Companys 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
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
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,
engineering, and infrastructure investment . This vision have led to the creation of
the tagline "Beyond Construction" which illustrates the organizations 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 Bankers 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
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 Indonesias 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 industrys 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
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
Companys 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 countrys social and economic growth,
including airports, toll roads, power plants, water works and flood control and other
public facilities.
The companys 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 companys 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.
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 Indonesias 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
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.
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 Indonesias largest independent, non-stateowned General Contracting Company with construction and engineering as core
business. NKEs 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
Nusa Konstruksi Enjiniring Tbk has built strong professional networks and capable
personnel. Background of the companys 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 clients interest
have earned them the privilege to build some of the highest profiled, often one-ofa 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 longterm 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 industryleading 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
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
NO
1.
2.
List of Association
NAMES
ADDRESS
PHONE NUMBER
EMAIL
Asosiasi Kontraktor
Wijaya Graha
Tel: +62 21
akinet@aki.or.id
Indonesia (AKI) Indonesian
Puri Blok D-1 Jl.
7200794,
Contractors Association
Darmawangsa
72790672
Raya No.2
Fax: +62 21
Jakarta 12160
7206805
Asosiasi Kontraktor
Jl. Kyai Tapa No.
Tel : (021)
bpn.aksindo@gmail.co
Kontruksi Indonesia
300 Kel. Grogol
56961245
(AKSINDO)Indonesian
Kec. Grogol
Fax : (021)
Contractor Construction
Petamburan
5660326
Association
Jakarta Barat
11450
NO
3.
NAMES
ADDRESS
PHONE NUMBER
EMAIL
Gabungan Perusahaan
Jl. Minangkabau
Tel: +6221
info@gapeksindo.co.id
Konstruksi Nasional
No.35F
83787219
Indonesia (GAPEKSINDO)
Manggarai,
Fax +62 21
Jakarta-Selatan
83787218
12970,
4.
Asosiasi Aspal Beton
Puri Sentra Niaga
Tel : 021-8626522
Indonesia (AABI)
Blok B No.38
Fax : 021-
Indonesian Asphalt
Jl. Raya
8626523
Concrete Association
Kalimalang,
dpp@aabi.or.id
Jakarta 13620
5.
Asosiasi Kontraktor
Jalan Prof. Dr.
Tel: +62 -21-
akgepi_pusat@indo.ne
Gedung dan Pemukiman
Latumeten,
5600701
t.id
Indonesia (AKGEPI)
Perkantoran Kota Fax: +62-21Grogol Blok C
5686236
No. 22
Jakarta Barat
6.
Asosiasi Kontraktor Jalan
Jl MT Haryono
Tel: 021-
Akji_pusat@indon.net.i
dan Jembatan Indonesia
Kav 52-53
7919120
(AKJI)
Gedung
Fax: 021-
Pusdiklat Depkop
7991690
Jakarta
7.
Gabungan Pengusaha
Jl. Raya Balap
Tel: (021)
dppadmin@gapebpe
Kontraktor Nasional
Sepeda No. 61 F
47862486
knas.org
(GABPEKNAS)
Jakarta Timur
Fax: (021)
Association of National
13220
4705092
Indonesian Contractor
NO
NAMES
ADDRESS
PHONE NUMBER
EMAIL
8.
Asosiasi Perusahaan
Jl. Benyamin
Tel: (021) 6407311
info@jimac-co.com
Rekondisi Alat Berat dan
Sueb Blok C-2
Fax: (021)
Truk Indonesia (APARATI)
Kota Baru
6415056
Indonesian Association Of
Bandar
Heavy Equipment And
Kemayoran
Truck Reconditioning
Jakarta Utara
Companies
14410
Gabungan Perusahaan
Perkantoran
9.
Tel: (021) 7946375
appaksi@indosat.net.i
Nasional Rancang Bangun Buncit Mas Blok B
Fax: (021)
Indonesia (GAPENRI)
No.11 Jl.
7980554
Association of Indonesian
Mampang
National Engineering
Prapatan Raya
Companies
No. 108 Jakarta

Selatan
10.
Asosiasi Perusahaan
Jl. Kelapa Molek
Tel: (021)
appaksi@gmail.com
Pengelola Alat Berat/Alat
IV Blok V-2 No.24
45846516
Konstruksi Indonesia
Kelapa Gading
Fax: (021)
(APPAKSI)
Jakarta 14240
45846516
Asosiasi Pengembang
Gedung Wakita
Tel: (021) 8508533
dpp.apersindo@yaho
Perumahan dan
Karya Jl. Biru Laut
Fax: (021)
o.com
Pemukiman Seluruh
X/Kav 10-A Lt.1
8508534
Construction Equipment
Hire and Rent
11.
Indonesia (APERSI)
NO
NAMES
ADDRESS
PHONE NUMBER
EMAIL
Asosiasi Produsen Tiang
TWINKC Centre
Tel: (021) 7984655
aptipusat@gmail.com
Beton Pratekan Indonesia
Lt. 8 Jl. Kapten
Fax: (021)
(APTI)
Piere Tendean
7984655
No.82 Jakarta
Pole Concrete Producer
12790
Gabungan Pelaksana
Jl. Raya
Tel: (021)
Konstruksi Nasional
Ragunan No.
78847247,
Indonesia (GAPENSI)
C/1, Jatipadang
78847248
National Contractors
Ps. Minggu,
Fax:
Association Of Indonesia
Jakarta 12540
(021)78847251
Assosiasi Kontraktor Lsitrik
Komplek
Tel: (021)
Indonesia (AKLI)
Perkantoran
7268491-2
The Association Of
Kebayoran
Fax: (021)
Indonesian electrical
Indah Blok B No.
7230329
Contractors
3, Jl. Ciledug
House and Real Estate
Developer
12.
13.
14.
bppgapensi@link.net
dppakli@indosat.net.id
Raya No.10
Jakarta Selatan
15.
16.
Asosiasi Kontraktor Air
Komplek Ruko
Tel: (021) 3162871
akaindopusat@yahoo.
Indonesia (AKAINDO)
Perkantoran Jl.
Fax: (021)
com
The Association of
Raden Saleh
3162873
Indonesian Water Works
Raya No. 18L
Contractor
Jakarta 10430
Persatuan Perusahaan
Rukan Simprug
Tel: (021)
Real Estat (REI)
Indah Jl. Tenku
72789105
dpprei@yahoo.com
NO
NAMES
ADDRESS
PHONE NUMBER
Indonesian Real Estate
Nyak Arief No. 9B
Fax: (021)
Association
Kebayoran
72789155
EMAIL
Lama, Jakarta
12220
17.
18.
19.
20.
Fiber Cement
Ruko Golden
Tel: (021)
sekartadji@cbn.net.id
Manufacturer Association
Trully D'Best Blok
75910037
(FICMA)
E 11 Lt. 2 Jl. RS
Fax: (021)
Fatmawati
75910042
Asosiasi Semen Indonesia
Gedung Irama
Tel: (021)
indcemas@indosat.net
(ASI) Indonesian Cement
Lt. 11 Jl. Rasuna
5261105-6
.id
Association
Said Blok X-1
Fax: (021)
Jakarta 12950
5261107-8
Perhimpunan Agen
Gedung Putra
Tel: (021) 5277150
Tunggal Alat-Alat Berat
Kalimantan
Fax: (021)
Indonesia (PAABI)
Lt.VI/5 Jl. Jend.
5277150
Gatot Subroto
Sole-Agents for Heavy
Kav. 12 Jakarta
Equipment Agent
Selatan
Asosiasi Industri Alat Besar
Jl. Raya Cakung
Tel: (021) 4400611
Indonesia (HINABI)
Cilincing Km 4
Fax: (021)
Heavy Equipment
Jakarta 14140
4400616
Asosiasi Pengerjaan
Jl. Raya Rawa
Tel: (021) 5401188
Logam dan Permesinan
Buaya No. 6
- 89
ASOSIASI (ASPEP)
Jakarta Barat
Fax: (021)
paabi@cbn.net.id
Manufacturer Association
Of Indonesia
21.
aspepj@gmail.com
NO
NAMES
ADDRESS
PHONE NUMBER
Indonesian Association of
11740
6191739
Asosiasi Perusahaan
Epicentrum Walk
Tel: (021) 2994
Inspeksi Teknik Indonesia
Strata Offices,
1205 / 9474 7172
(APITINDO)
Komplek Rasuna
Fax: (021) 2994
Epicentrum
1206
Technical Inspection
Menteng Atas
Agencies
Setiabudi
EMAIL
Metal Work and

Machinery
22.
bsapitindo@cbn.net.id
Jakarta Selatan
23.
Asosiasi Industri dan
Jl. Griya Jatisari
Tel: (021) 8840729
Perdagangan Mesin
Tengah I Blok DU
Fax: (021)
Konstruksi Indonesia
10/15
88964721
(AIMKI)
Jakasampurna,
Indonesian Association Of
Bekasi Barat
Machine Construction
17145
gamma@dnet.net.id
Industry and Trade
24.
Adhi Graha
Tel: (021)
gamma@dnet.net.id
Steel Structure (APKOBI)
Building Lt. 10
57930883
org.gamma@yahoo.c
(Gedung
Fax: (021)
om
Surveyor
57930883
Indonesia) Jl.
Gatot Subroto
Kav. 56 Jakarta
selatan 12950
25.
The Indonesian Iron and
Gedung
Tel: (021)
executive_director@iisi
NO
NAMES
ADDRESS
PHONE NUMBER
EMAIL
Steel Industry Association
Krakatau Steel,
5235655, 5235501
a.org
(IISA)
Lantai 4 Jl. Gatot
Fax: (021)
Subroto Kav. 54
5235651
Jakarta Selatan
12950
26.
Ikatan Arsitek Indonesia
Jakarta Design
Tel: +62 21
(IAI)
Center Lt. 7
5304715
Indonesian Institute of
Jl. Gatot Subroto
Fax: +62 2153047
Architects
Kav. 53,
22
sekretariat@iai.or.id
Slipi, Jakarta
10260
Indonesia
27.
Asosiasi Semen Indonesia
Gedung Irama Lt
Tel: 5261105-6
indcemas@indosat.net
(ASI)
II E,
Fax: 5261107 - 8
.id
Indonesia Cement
Jl. RH. Rasuna
Association
Said Blok X-l
apbi-icma@indo.net.id
Jakarta 12950
28.
29.
Asosiasi Pertambangan
Menara
Tel: 62 21
Batubara Indonesia (APBI)
Kuningan Lt. 1
30015935
Jl. HR Rasuna
Fax : 62 21
Indonesian Coal Mining
Said X-7 Kav. 5
30015936
Association
Jakarta Selatan
Asosiasi Independent
d/a Sucofindo
Tel: 62 21
customer.service@suc
Surveyor Indonesia (AISI)
Center Lt III
7983666 Ps. 1344
ofindo.co.id
Jl. Raya Pasar
Fax : 62 21
NO
30.
31.
NAMES
ADDRESS
PHONE NUMBER
EMAIL
Minggu Kav 34
7986990,7983888
Independent Surveyors
Jakarta 12780
Asosiasi Industri Luminer
Komp.
Tel : 62 21
dwi_dinamika@yahoo.
dan Kelistrikan Indonesia
Perkantoran
6334158
co.id
(AILKI)
Duta Merlin Blok
Fax : 62 21
B-34
6335382
Association Of Indonesian
Jl. Gajah Mada
Lighting and Electrical
No. 3-5
Industries
Jakarta 10130
Asosiasi Industri Mesin
Jl. R.E.
Tel. : 62 21
asimpi_08@yahoo.co
Perkakas Indonesia
Martadinata No.
6911220,
(ASIMPI)
1E
6911221
Jakarta 14430
Fax. : 62 21
6902158
Indonesian Machine Tool

Industries Association
32.
Asosiasi Industri Peralatan
Jl. Cianjur No. 4
Tel./ Fax : 62 21
Pabrik Indonesia (AIPPI)
Jakarta 10310
6398983
Manufacturing Equipment
Industries
33.
Asosiasi Industri Mesin
asimpi_08@yahoo.co
Perkakas Indonesia
Jl. R.E.
Tel. : 62 21
(ASIMPI)
Martadinata No.
6911220, 6911221
Indonesian Machine Tool
1E
Fax. : 62 21
NO
34.
NAMES
ADDRESS
PHONE NUMBER
Industries Association
Jakarta 14430
6902158
Asosiasi Industri Rekondisi
Jl. Cianjur No.4,
Telp. : 62 21
Mesin & Peralatan
Menteng
31923528,
Indonesia (AIRMEPI)
Jakarta 10310
31934205
EMAIL
Fax. : 62 21
3917341
Reconditioned Machine
and Equipment Industries
35.
Asosiasi Pengerjaan
Jl. Rawa Buaya
Tel. : 62 21
Logam dan Permesinan
No. 6
6190745, 5401188
(ASPEP)
Jakarta 11740
Fax. : 62 21
6191739
Indonesian Association of
Metal Work and
Machinery Manufacturers
36.
Asosiasi Perusahaan
Perkantoran
Tel. : 62 21
aptek2003@yahoo.co
Tehnik Mekanikal dan
Majapahit
3808767 -
Elektrikal (APTEK)
Permai Blok
3808768
C/107
Fax. : 62 21
Association of Mechanical
JI.Majapahit No.
3808770
and Electrical Engineering
18-20 Jakarta
Companies
6.2
No
1.
GOVERNMENT BODIES
Name
Ministry of Finance
Address
Phone
Number
Jl. Lapangan
Tel: 021-384
Banteng Timur
1067
Email
helpdesk@depkeu.go.id
No.2-4
Jakarta 10710
Fax: 021-380
8395
2.
Ministry of Trade
M. I. Ridwan Rais
Road, No. 5
Central Jakarta
10110
3.
Ministry of Public
Ruang Layanan
Work
Informasi Publik
Tel: 021-385
pusdata@kemendag.go.id
8337
Fax: 021-385
8337
informasi@pu.go.id
Gedung Utama
Lantai 1
Kementerian
Pekerjaan
Tel: 021-739
Umum
2262
Jalan Pattimura
No.20
Kebayoran Baru
Jakarta Selatan
4.
Ministry of
Jl. Jend. Gatot
Tel: 021-522
Manpower and
Subroto Kav. 51
9285
redaksi_balitfo@depnakertrans.go.id
Transmigration
Jakarta 12950
Fax: 021-797
4488
5.
6.
7.
8.
Ministry of Foreign
Jl. Taman
Tel: 021-344
Affairs
Pejambon No. 6
1508
Jakarta Pusat
Fax: 021-380
10110
551
Ministry of Home
Jl. Medan
Tel: 021-384
Affairs
Merdeka Utara
0058
No. 7
Fax: 021-381
Jakarta 10110
1120
Jl. Jend. Gatot
Tel: 021-525
Subroto Kav. 52-
6548
53
Fax: 021-522
Jakarta 12950
9592
Ministry of Energy
Jl. Merdeka
Tel: 021-380
And Mineral
Selatan 18
4242
Resources
Jakarta 10110
Fax: 021-384
Ministry of Industry
infomed@deplu.go.id
pusdatinkomtel@depdagri.go.id
pusdatin@kemenperin.go.id
pie@esdm.go.id
7461
9.
National
Jl. Alteri Pondok
Tel: +62-21-
Construction
Indah no. 82
7231556, +62-
Services
Kebayoran
21-7234482
Development Board
Lama Jakarta
Selatan 12160
lpjkn@lpjk.org
Fax: +62-217396974
10
State Minister for
Jl. Taman
Tel: 021-390
Chairperson of The
Suropati No. 2
5650
National
Jakarta 10310
Fax: 021-334
Development
779
Planning Agency
11.
State Minister for
Jl. Raden Patah
Tel: 021-739
Public Housing
I No. 1 Lantai 2
7727
m_yusuf@kemenpera.go.id
Wing 4
Kebayoran Baru,
Fax: 021-739
Jakarta -
7727
Selatan
6.3
NO
1.
LIST OF RELATED AGENCIES

NAMES
ADDRESS
NUMBER
EMAIL
Kamar Dagang dan
Menara Kadin
Tel: [62-21]-
sekretariat@kadin-
Industri Indonesia
Indonesia Lt. 29
5274484
indonesia.or.id
Jalan HR Rasuna
Fax: [62-21]
Said X-5 kav 2-3,
5274331 -
Jakarta 12950 -
5274332
(KADIN)
Indonesian Chamber
of Commerce and
kadin@kadin-indonesia.or.id
Indonesia
Industry
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
Indonesias 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.
Indonesias 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.
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.
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
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).
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,
Weaknesses
1. Lack of skilled workforce
2. Poor transportation
infrastructure between islands
3. Low level of education, with
school life expectancy of 13
including petroleum, tin,
years (primary to tertiary
natural gas, nickel, timber,
education)
bauxite, copper, fertile soils,

coal, gold, silver
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
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
new development and
construction companies from
technology
China, South Korea and Japan
4. AEC (ASEAN Economic

Community), regional
economic integration by 2015
Notes

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DOING BUSINESS IN

Construction Industry Development Board Malaysia (CIDB)

Doing Business in Indonesia:

Board Malaysia as to accuracy, authenticity or

contained in this document. Due care has been

is a copy reserved of the

DOING BUSINESS IN INDONESIA | 2

Malaysia & Indonesia : At A Glance

General Economic Development and Status

Construction Industry Development

Essential Information For Doing Business in Indonesia

How to Establish a Business Entity

Law & Related Construction Law

DOING BUSINESS IN INDONESIA | 3

Cost of Doing Business in Indonesia

List of major building materials suppliers and

List of building materials suppliers and their

Potential Business Opportunities

Listing of some potential projects opportunities

List of Top 15 Contractors in Indonesia for Joint Venture

List of Local Associations/Construction Bodies/Construction

Challenges and Issues Faced by Malaysian Contractors in

Strengths, Weaknesses, Opportunities, Threats (SWOT)

DOING BUSINESS IN INDONESIA | 4

DOING BUSINESS IN INDONESIA | 5

29,628,392 (July 2013 est.)

251,160,124 (July 2013 est.)

72.8% of total population

50.7% of total population

2.49% annual rate of change

2.45% annual rate of change

KUALA LUMPUR (capital) 1.493

JAKARTA (capital) 9.121

million; Klang 1.071 million;

million; Surabaya 2.509 million;

Johor Bahru 958,000 (2009)

Bandung 2.412 million; Medan

2.131 million; Semarang 1.296

Johor, Kedah, Kelantan,

Melaka, Negeri Sembilan,

special region** (daerah-

Pahang, Perak, Perlis, Pulau

daerah istimewa, singular -

Pinang, Sabah, Sarawak,

daerah istimewa), and 1

Selangor, Terengganu; and 1

national capital district***

federal territory (Wilayah

(daerah khusus ibukota);

Aceh*, Bali, Banten, Bengkulu,

DOING BUSINESS IN INDONESIA | 6

components, Kuala Lumpur,

Gorontalo, Jakarta Raya***,

Labuan, and Putrajaya

Jambi, Jawa Barat (West

DOING BUSINESS IN INDONESIA | 7

Sumatera Selatan (South

US$506.7 billion (2012 est.)

US$1.237 trillion (2012 est.)

5.6% (2012 est.)

6.2% (2012 est.)

US$17,200 (2012 est.)

US$5,100 (2012 est.)