DOING BUSINESS IN - CIDB +603 4047 7000 Fax: +603 4047 7070 Email: [email protected] DOING BUSINESS IN INDONESIA | 2 A Construction Perspective transmitted by any means, Construction

DOING BUSINESS IN INDONESIA | 1

A Construction Perspective

DOING BUSINESS IN

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: [email protected]


FFoorreewwoorrdd

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

Board Malaysia as to accuracy, authenticity or

completeness. No warranty, express or implied, is

being made or will be made Construction Industry

Development Board Malaysia as regards the

accuracy or adequacy of 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).

Doing Business in Indonesia: A Construction Perspective 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). 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: [email protected]


CCOONNTTEENNTTSS Doing Business in INDONESIA A Construction Perspective

Map of Indonesia 5

Malaysia & Indonesia : At A Glance 6

1 Introduction 10

2 Background on Indonesia 12

2.1 The Country 12

2.2 General Economic Development and Status 13

2.3 Construction Industry Development 15

3 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 42

3.2.1 Banking System 42


3.2.2 Method of Payment 44

3.2.3 Cost of Doing Business in Indonesia 45

3.2.4 Project Financing 46

3.3 Manpower 52

3.3.1 Labor Resources 52

3.3.2 Wages Rates 53

3.4 Materials 56

3.4.1 List of major building materials suppliers and

their contact address 56

3.5 Machinery 61

3.5.1 List of building materials suppliers and their

contact address 62

4 Potential Business Opportunities 65

4.1 Listing of some potential projects opportunities 65

4.2 Networking channels 67

5 List of Top 15 Contractors in Indonesia for Joint Venture Possibilities

69

6 List of Local Associations/Construction Bodies/Construction Related Agencies or Ministries in Indonesia

84

7 Challenges and Issues Faced by Malaysian Contractors in Indonesia

96

8 Strengths, Weaknesses, Opportunities, Threats (SWOT) Analysis

100


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Malaysia Indonesia

Area: 329,847 sq km 1,904,569 sq km

Population: 29,628,392 (July 2013 est.) 251,160,124 (July 2013 est.)

Urban

population:

72.8% of total population

(2011)

50.7% of total population

(2011)

Rate of

Urbanization:

2.49% annual rate of change

(2010-15 est.)

2.45% annual rate of change

(2010-15 est.)

Major Urban

Areas -

Population:

KUALA LUMPUR (capital) 1.493

million; Klang 1.071 million;

Johor Bahru 958,000 (2009)

JAKARTA (capital) 9.121

million; Surabaya 2.509 million;

Bandung 2.412 million; Medan

2.131 million; Semarang 1.296

million (2009)

Capital: Kuala Lumpur Jakarta

Administrative

Divisions:

13 states (negeri-negeri,

singular - negeri);

Johor, Kedah, Kelantan,

Melaka, Negeri Sembilan,

Pahang, Perak, Perlis, Pulau

Pinang, Sabah, Sarawak,

Selangor, Terengganu; and 1

federal territory (Wilayah

Persekutuan) with 3

31 provinces (provinsi-provinsi,

singular - provinsi), 1

autonomous province*, 1

special region** (daerah-

daerah istimewa, singular -

daerah istimewa), and 1

national capital district***

(daerah khusus ibukota);

Aceh*, Bali, Banten, Bengkulu,


components, Kuala Lumpur,

Labuan, and Putrajaya

Gorontalo, Jakarta Raya***,

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

(Purchasing

Power Parity):

US$506.7 billion (2012 est.) US$1.237 trillion (2012 est.)

GDP - Real

Growth Rate:

5.6% (2012 est.) 6.2% (2012 est.)

GDP - Per

Capita (PPP):

US$17,200 (2012 est.) US$5,100 (2012 est.)

Labor Force: 12.9 million (2012 est.) 118.1 million (2012 est.)

Unemployment

Rate:

3% (2012 est.) 6.1% (2012 est.)

Revenues: US$67.31 billion US$164 billion

Expenditures: US$80.89 billion (2012 est.) US$180.9 billion (2012 est.)

Inflation Rate

(Consumer

Prices):

1.7% (2012 est.) 4.3% (2012 est.)


EASE OF DOING BUSINESS RANKING

Malaysia Indonesia

Ease of Doing Business Rank 6 120

Starting a Business 3 23

Dealing with Construction Permits 8 16

Getting Electricity 5 17

Registering Property 6 15

Getting Credit 1 14

Protecting Investors 3 8

Paying Taxes 7 24

Trading Across Borders 3 8

Enforcing Contracts 5 19

Resolving Insolvency 4 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 world’s 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 world’s 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 Indonesia’s 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 Indonesia’s

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 Indonesia’s 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 debt-

to-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

Indonesia’s 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 Asia’s 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, Indonesia’s

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 world’s 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 Construction Industry Development

GDP at Current Market Price By Industrial Origin (Billion Rupiahs/ Billion US$),

2006-2012

Industry 2006 2007 2008 2009 2010

Construction 251,132.30 304,996.80 419,711.90 555,192.50 660,890.50

US$ 20.82 25.29 34.80 46.03 54.80

Industry 2011 2012

Construction 754,483.50 860,964.80

US$ 62.56 71.39

Growth Rate of Gross Domestic Product at 2000 Constant Market Prices By

Industrial Origin (Percent), 2006-2012

Industry 2006 2007 2008 2009 2010 2011 2012

Construction 8.34 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 2007 2008 2009 2010 2011 2012

Construction 7.5 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 2006 2007 2008 2009 2010 2011

Building

Construction

31,374,730 34,612,257 33,078,407 71,472,060 93,705,954 107,417,601

US$ 2,601.55 2,870.00 2,742.81 5,926.37 7,769.97 8,906.92

Civil

Construction

26,049,107 28,615,500 46,241,921 137,098,864 164,791,068 199,260,546

US$ 2,159.95 2,372.76 3,834.32 11,368.06 13,664.26 16,522.43

Specialized

Construction

14,519,472 18,447,216 22,695,272 47,057,295 54,675,972 63,699,771

US$ 1,203.93 1,529.61 1,881.86 3,901.93 4,533.66 5,281.90

TOTAL 71,943,309 81,674,973 102,015,600 255,628,219 313,172,994 370,377,918

US$ 5,965.44 6,772.38 8,459.00 21,196.36 25,967.91 30,711.27


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 equipment’s. 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 Description Unit 2008 2009 2010 2011 2012

1 Total Number

of workforce

(all sectors)

Person

(million)

102.5 104.9 108.2 109.7 110.8

2 Construction

Sector

Person

(million)

5.44 5.49 5.59 6.34 6.79

Portion of total % 5.31 5.23 5.17 5.78 6.13

3 Education Level of Construction Workforce

Elementary

School

% 54 52 52 52 52

High School % 42 44 44 44 44

University / % 4 4 4 4 4


Diploma

4 Certified Construction Workforce (% from total workforce)

Certified Skilled

labour

% 2.68 3.82 6.47 6.31 9.17

Certified

experts

% 1.14 1.83 2.20 2.03 1.91

2.7

5.76.3

8.39.6

10.5

1617

0

2

4

6

8

10

12

14

16

18

2005 2006 2007 2008 2009 2010 2011 2012

USD

, Bill

ion

Year

Infrastructure Fund By Central Government


Materials and Equipment Demand for Infrastructure Projects

Item 2010 2011 2012 2013 2014

Cement

(Mil. MT)

8.6 12.3 13.7 13.9 16.0

Steel (Mil.

MT)

3.4 4.8 5.3 6.0 7.0

Asphalt

(Mil. MT)

0.8 1.2 1.3 1.7 2.0

Heavy

Equipment

(Thou, MT)

26.4 37.8 42.0 50.4 60.5

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.

16.118.4

21.8

32.4

40.3

05

1015202530354045

2009 2010 2011 2012 2013

USD

, Bill

ion

Year

National Construction Market Data


However, the vast majority of these companies are classified as being small-

sized 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 Indonesia’s 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



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 cost-

effective 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

Office

PT PMA PT Local

Name of entity Based on home

country company

name

Can be any

name, as long as

it is not already in

use

Can be any

name, as long as

it is not already in

use

Ownership No Equity –

“owned” by

home country

company

Depending on

industry, foreign

ownership can be

up to 100%

No foreign

ownership

allowed. Must be

100% Indonesian

Restriction – No revenue Revenue allowed Revenue allowed


Representative

Office

PT PMA PT Local

revenue

allowed. Only as

marketing office

and costs allowed

Restriction –

Investment in

industry

Not applicable Based on

Negative List. Not

all industries open

for foreign

investment. If yes,

can also have

restriction on

shareholding

including joint

ventures.

Generally no

except where

certain industries

require domestic

investment

approval.

Approval required

for setting up?

Yes – BKPM

(Investment

Coordinating

Board)

Yes – BKPM

(Investment

Coordinating

Board)

No except in

certain industries

Board of

Commissioners

Not applicable Minimum one,

foreigners allowed

Minimum one,

foreigners allowed

Board of Directors Not applicable Minimum one,

foreigners allowed

Minimum one,

foreigners allowed

Investment & paid

up capital

No paid up

capital required

Minimum

investment USD

250,000 or paid up

capital of USD

100,000

Paid up generally

RP 50 million / USD

5,500

Reporting Yes Yes including No except under


Representative

Office

PT PMA PT Local

requirements –

investment?

periodic reporting

and subsequent

application for

permanent

operating license

domestic

investment

approach

Open bank

account

Yes Yes Yes

Bank signatories Foreigners

allowed if KITAS

holder or director

or komisaris

Foreigners

allowed if KITAS

holder or director

or komisaris

Foreigners

allowed if KITAS

holder or director

or komisaris

Work permits

allowed?

Yes Yes Yes

Fiscal incentive? Yes No No

Purchase assets Yes Yes Yes

Other incentives? None Importation /

Master List

None

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 agency’s 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 project’s

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

(US$0.0041 million to US$0.207 million)

15%

Over IDR 250 million to IDR 500 million

(US$0.207 million to US$0.0415 million)

25%

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

shares trade in stock exchange market

5 % Lower than normal rate

Gross turnover up to IDR 50.000.000.000

(US$4,145,592.02)

50 % deduction from normal

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

Hungary

Pakistan

Sweden

Australia

India

Qatar

Switzerland

Austria

Italy

The Philippines

Syria

Belgium

Japan

Poland

Taiwan

Bulgaria

Jordan

Portugal

Thailand

Brunei Darussalam

Korea,

Romania

Tunisia

Bangladesh

Russia

Turkey

Canada

Kuwait

Saudi Arabia

Ukraine

Czech Republic

Luxembourg

Seychelles

United Arab Emirates

China

Malaysia

Singapore

United Kingdom

Denmark

Mexico

Slovakia

United States of America

Finland

Mongolia

South Africa

Uzbekistan

Egypt

Netherland

Spain

Venezuela

France

New Zealand

Sri Lanka

Vietnam

German

Norway

Sudan

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)

Asset

Useful Life

(years)

Method of Calculation

Straight Line (%) Double Declining

Balance (%)

l. Non Building

Group 1 4 25 50

Group 2 8 12.5 25

Group 3 16 6.26 12.5

Group 4 20 5 10

ll. Building

Permanent 20 5

Non-Permanent 10 10

Amortization

Non-Physical

Asset

Useful Life (years) Method of Calculation

Straight Line (%) Declining Balance

(%)

Group 1 4 25 50

Group 2 8 12.5 25

Group 3 16 6.25 12.5

Group 4 20 5 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 agency’s

goal is to help promote access to worldwide markets for Indonesia’s export-


related commodities, support Indonesia’s 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 export-

related 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 government’s 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 2010-

2014 (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 Bank’s 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 Indonesia’s infrastructure priorities in its medium-

term 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 bank’s

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.

ADB’s 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 Bank’s

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 Bank’s 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

Indonesia’s 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 non-

structural 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

Indonesia

(Persero)Tbk

Type of building

materials:

PT Semen Indonesia

(Persero)Tbk

Kantor Pusat

Gedung Utama SG

Jl. Veteran

Gresik 61122

Tel : (62-31) 398

1732, (62-31) 398

1745

Fax : (62-31) 398

3209, (62-31) 397

[email protected]

om



Cement Jawa

Timur,Indonesia

2264

2.

PT Semen Tonasa

Type of building

materials:

Cement

Lantai 2 Kantor Pusat

PT Semen Tonasa,

Biringere-Pangkep,

Sulawesi Selatan

90651

Telephone :

(0410) 312345

Fax : (0410)

310060

customercare@sement

onasa.co.id

3. PT Semen Kupang

Type of building

materials:

Cement

Jalan Yos Sudarso,

Osmo, Tenao

Kotak Pos 37,

Kupang

Nusa Teggara Timur

Tel: 62-380

832100

62-380-832105

Fax: 62-380-

832107

semen_kupang@telko

m.net

4. PT Semen Gresik

Type of building

materials:

Cement

Jalan Veteran No.

10, Gresik

61122, Jawa Timur

Tel: 62-31-

3981732

62-31-981745

Fax: 62-31-

3983209

[email protected]

5. PT Holcim

Indonesia

Type of building

materials:

Cement,

concrete, pre-

cast

Jamsostek Tower North

Bldg 14-15 Fl.

Jl. Jend. Gatot Subroto

No. 38

Jakarta 12930

Tel: 62-21-

52962011

Fax: 62-21-

52962022

[email protected]

6. PT Indocement

Tunggal Prakarsa

Wisma Indocement

14th Floor

Tel: 62-21-

2512121

corpsec@indocement.

co.id



TBK

Type of building

materials:

Cement,

concrete,

aggregates

Jalan Jend.

Sudirman Kav. 70-71

Jakarta 12910,

Indonesia

Fax: 62-21-

2510060

7. PT Semen Baturaja

Type of building

materials:

Cement

Jalan Abikusno

Cokrosuyoso

Kertapati,

Palembang

Sumatera Selatan

30001

P O Box 1175

Tel: 62-771-

511261

Fax: 62-771-

512126

8. PT Semen Andalas

Indonesia

Type of building

materials:

Cement

Jalan Raya Lhok

Nga

Km. 16, P O Box 30,

Banda Aceh,

Tel: 62-651-22571

Fax: 62-651-

44101

[email protected]

9. PT Semen Bosowa

Maros

Type of building

materials:

Cement

Jalan Urip Sumoharjo

No 188

P O Box 273, Ujung

Pandang,

Sulawesi Selatan

Tel: 62-411-

444444

Fax: 62-411-

447744

10. PT Semen Padang

Type of building

materials:

Cement

Indarung Padang

25237, Sumatera

Barat

Telp. (0751) 815250;

08126611910 (gsm)

Fax. 0751-815590

Tel: (0751)

815250

Fax. 0751-815590



Fax. Marketing 0751-

815001

11. CV. Putra

Pundarika

Type of building

materials:

Paint, Electrical,

Piping, etc

Ruko Bunga Raya

Blok B No. 16

Kelurahan Belian

Kecamatan Nongsa

Batam Centre, Pulau

Batam

Tel: 77 8733 6875

12. PT Arwana

Citramulia Tbk

Type of building

materials:

Ceramic tiles

Ruko Sentra Niaga

Puri Indah, blok T2-

24, Jalan Puri Indah

Raya, 11610

Tel: 5830 2363

13. PT Bhineka Ciria

Artana

Types of building

materials:

Door, locks, glass

JL. Arteri Mangga

Dua Block F-6 No. 1

Pusat Perdagangan

Bahan Bangunan

dan Interior

Jakarta 10730 -

INDONESIA

Tel: (+6221) 601

1719 - 20

Fax: (+6221) 601

6985

[email protected]

14. PT Cipta Mortar

Utama

Types of building

materials:

Premixed mortar

Menara Sudirman

Lantai 11

Jl. Jendral Sudirman

Kav. 60, Jakarta

12160

Tel: (62-21) 522

6619

Fax. (62-21) 522

6629

15. PT. Knauf Cilandak Tel : +62 21 789 [email protected]



Gypsum Indonesi

a,

Types of building

materials:

Gypsum board,

compound and

plaster, gypsum

tile, metal section

Commercial Estate,

Garden Centre 5th

Floor Suite 16(B),

JL Raya Cilandak

KKOJakarta 12560,

Indonesia

1661

Fax : +62 21 789

1662

[email protected]

16. PT Lafarge

Cement Indonesia

Types of building

materials:

Cement

Gedung Graha

CIMB Niaga,25th

Floor

Jl. Jend. Sudirman

Kav. 58

Jakarta 12190 -

Indonesia

Tel: 62 21 2953

3800

Fax: 62 21 2953

3801

17. PT. Adhimix

Precast

Types of building

materials:

Readymix

concrete, precast

concrete

Indonesia Graha

Anugerah Lt. 3

Jl. Raya Ps. Minggu

No. 17 A

Pancoran Jakarta

Selatan 12780

Tel: (021) 799

4666

Fax: (021) 726

8669

[email protected]

18. PT BangunPerkasa

Adhitamasentra

Types of building

materials:

Graha GRC board

Lt.3

Jl. S.Parman Kav.64

Jakarta 11410 -

Indonesia

Tel: (62-21)

53666800

Fax : (62-21)

53666720



Glass fibre

cement board

19. PT. Maccaferri

Indonesia

Types of building

materials:

wire mesh basket,

woven wire mesh

unit, chainlink, etc

Aminta Plaza 2 nd

floor, suite 204

Jl. TB Simatupang

kav.10 | Jakarta

12310 Indonesia

Tel: (62-21) 750

6555, Fax : (62-

21) 750 6553

[email protected]

20. PT. Jaindo Metal

Industries

Types of building

materials:

Metal roofing,

light steel house

framing, etc.

Jl. Soekarno Hatta

No.227

Bandung 40233

Tel: +62-22-

6030755

Fax: +62-22-

6030165

headoffice@j-

steel.co.id

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


1. PT Komatsu

Indonesia

Komatsu Indonesia

Industrial

Development

Center, Cakung

Cilincing Plant

Jl. Raya Cakung

Cilincing Km. 4

Jakarta Utara 14140

+62.21 440 0611

+62.21 440 0615

2. PT Hexindo

Adiperkasa Tbk

Kawasan Industri Pulo

Gadung

Jl. Pulo Kambing II

Kav. I - II No. 33

Jakarta

Indonesia 13930

Tel. +62-

(0)214611688

Fax. +62-

(0)214611686

inquiry@hexindo-

tbk.co.id

3. PT Trakindo Utama PT Trakindo Utama

JL Cilandak KKO

Raya

Jakarta 12560,

Indonesia

Tel: (62-21)

7822373

Fax : (62-21)

7817786

[email protected]

.id

4. PT. Daya Kobelco

Construction

Machinery

Indonesia

Pondok Indah Office

Tower 3, 15th Fl, Suite

1202

Jl. Sultan Iskandar

Muda Kav. VTA

Pondok Indah 12310,

Jakarta Selatan

Tel: +62(0)21

7592 2828

Fax: +62(0)21

7592 2822

[email protected]

d



5. PT. United Tractors

Pandu

Engineering

Jl. Jababeka XI Blok

H 30 – 40

Kawasan Industri

Jababeka

Cikarang 17530

Indonesia

Tel: +62 21 893

5016

Fax : +62 21 893

4772/6353

[email protected]

6. PT Waja Kamajaya

Sentosa

Jl Penggilingan Raya,

No 99 Jakarta 13940,

Indonesia

+62-21 460 1651

+62-21 460 4203

[email protected]

7. PT Mitrindo

Dutaprakarsa

Jln. Hidup Baru 131

Jakarta Utara -

Indonesia

Tel: (021) 6405

803

Fax: (021) 6471

7908

[email protected]

m

8. PT Sanggar

Sarana Baja

MT Building, 5th Floor,

Suite 501, Jl. Cilandak

KKO No.1, Jakarta

12560

Tel: +6221 2997

6830

+6221 2997

6835

[email protected]

9. PT. Delimajaya

Carrosserie

Industry

Jl. KH. Soleh Iskandar

No.5

Bogor, Indonesia

16111

Tel: +62 251 8654

300

Fax:+62 251 8660

273

info@delimajayacarross

erie.com,

10. PT. Universal Tekno

Reksajaya

Jl. Raya Bekasi Km.

22, Cakung Jakarta

13910 Indonesia

Tel: +62 21 2457

6818

Fax: +62 21 4682

2748

[email protected]



11. PT Sarana Steel

Engineering

Mechanical Structure

Fabrication /

Engineering

Jl. Pulo Kambing II

No.11, Kawasan

Industri Pulo Gadung

Jakarta 13930 -

Indonesia .

Tel: (021) -

46826589

Fax: (021) -

4609679

[email protected]

12. PT Mitrindo

Dutaprakarsa

Jln. Hidup Baru 131

Jakarta Utara -

Indonesia

Tel: (021) 6405

803

Fax: (021) 6471

7908

[email protected]

m


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 Networking Channels

i. 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


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 Sales 2011

(million USD)

Sales 2012

(million USD)

1 PT Wijaya Karya (Persero) Tbk

Jl D.I. Panjaitan Kav 9

Jakarta 13340 – Indonesia

Tel: (6221) 8192808/ 8508640/

8508650 ext.1917

Fax: (6221) 8191235/ 81999713

Contact: Destiawan

([email protected])

www.wika.co.id

976.6 1234.2

2 PT Waskita Karya (Persero) Tbk

Waskita Building

799.4 917.5



(million USD)

Sales 2012

(million USD)

Jl. MT Haryono Kav 10 Cawang


Tel: (6221) 8508410/20

Fax: (6221) 8508506

([email protected])

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

620.0 800.0

4 PT Adhi Karya (Persero) Tbk

Jl. Raya Pasar Minggu Km 18

Jakarta 12510 - Indonesia

Tel: (6221) 7975312

Fax: (6221) 7975311

([email protected])

735.7 794.5

5 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)

375.2 524.8



(million USD)

Sales 2012

(million USD)

([email protected])

6 PT Totoal Bangun Persada Tbk

Jl. Letjend. S. Parman no. 106

Jakarta 11440 – Indoneisa

Tel: (6221) 5666999

Fax: (6221) 5663069

([email protected])

www.totalbp.com

390.0 430.0

7 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

([email protected]/

[email protected])

www.jayakontruksi.com

353.0 412.0

8 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

([email protected])

217.0 260.0



(million USD)

Sales 2012

(million USD)

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

([email protected])

173.8 210.9

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

([email protected])

www.brantas-abipraya.com

124.7 171.7

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

([email protected])

www.ptbck.com

101.1 170.0



(million USD)

Sales 2012

(million USD)

12 PT Ninda Karya (Persero)

Jl. Letjend Haryono MT

Kav 22 Jakarta Timur 13630

Tel: (6221) 8093276

Fax: (6221) 8093105

Contact: Mr Respati Hari Winarno

([email protected]/

nindyakarya.co.id)

www.nindyakarya.co.id

94.2 167.9

13 PT Nusa Konstruksi Enjiniring

Jalan Sunan Kalijaga 64, Jakarta

Selatan

Tel: (6221) 7221003

Fax: (6221) 7396580

Contact: Mr Djohan Halim

([email protected])

www.nusakonstruksi.com

120.7 126.7

14 PT Wijaya Kusuma Contractors

[email protected]

www.wkcnet.com

Contact: Ms Clara Agustina

(6221) 3905658

83.8 116.3



(million USD)

Sales 2012

(million USD)

15 PT Tatamulia Nusantara Indah

Sapta Mulia Center

Jl. Rawa Gelam V Kav OR-3B

Pulogadung Industrial Estate


Tel: (6221) 4606960

([email protected])

<100 <110

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. WIKA’s 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 Company’s 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 organization’s 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 Banker’s 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 Indonesia’s 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 industry’s 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

Company’s 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 country’s social and economic growth,

including airports, toll roads, power plants, water works and flood control and other

public facilities.

The company’s 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 company’s 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 Indonesia’s 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 Indonesia’s largest independent, non-state-

owned General Contracting Company with construction and engineering as core

business. NKE’s 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 company’s 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 client’s interest

have earned them the privilege to build some of the highest profiled, often one-of-

a 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 long-

term 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 industry-

leading 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 List of Association

NO NAMES ADDRESS PHONE NUMBER EMAIL

1.

Asosiasi Kontraktor

Indonesia (AKI) Indonesian

Contractors Association

Wijaya Graha

Puri Blok D-1 Jl.

Darmawangsa

Raya No.2

Jakarta 12160

Tel: +62 21

7200794,

72790672

Fax: +62 21

7206805

[email protected]

2.

Asosiasi Kontraktor

Kontruksi Indonesia

(AKSINDO)Indonesian

Contractor Construction

Association

Jl. Kyai Tapa No.

300 Kel. Grogol

Kec. Grogol

Petamburan

Jakarta Barat

11450

Tel : (021)

56961245

Fax : (021)

5660326

[email protected]

m



3.

Gabungan Perusahaan

Konstruksi Nasional

Indonesia (GAPEKSINDO)

Jl. Minangkabau

No.35F

Manggarai,

Jakarta-Selatan

12970,

Tel: +6221

83787219

Fax +62 21

83787218

[email protected]

4.

Asosiasi Aspal Beton

Indonesia (AABI)

Indonesian Asphalt

Concrete Association

Puri Sentra Niaga

Blok B No.38

Jl. Raya

Kalimalang,

Jakarta 13620

Tel : 021-8626522

Fax : 021-

8626523

[email protected]

5.

Asosiasi Kontraktor

Gedung dan Pemukiman

Indonesia (AKGEPI)

Jalan Prof. Dr.

Latumeten,

Perkantoran Kota

Grogol Blok C

No. 22

Jakarta Barat

Tel: +62 -21-

5600701

Fax: +62-21-

5686236

[email protected]

t.id

6.

Asosiasi Kontraktor Jalan

dan Jembatan Indonesia

(AKJI)

Jl MT Haryono

Kav 52-53

Gedung

Pusdiklat Depkop

Jakarta

Tel: 021-

7919120

Fax: 021-

7991690

[email protected]

d

7. Gabungan Pengusaha

Kontraktor Nasional

(GABPEKNAS)

Association of National

Indonesian Contractor

Jl. Raya Balap

Sepeda No. 61 F

Jakarta Timur

13220

Tel: (021)

47862486

Fax: (021)

4705092

dppadmin@gapebpe

knas.org



8.

Asosiasi Perusahaan

Rekondisi Alat Berat dan

Truk Indonesia (APARATI)

Indonesian Association Of

Heavy Equipment And

Truck Reconditioning

Companies

Jl. Benyamin

Sueb Blok C-2

Kota Baru

Bandar

Kemayoran

Jakarta Utara

14410

Tel: (021) 6407311

Fax: (021)

6415056

[email protected]

9.

Gabungan Perusahaan

Nasional Rancang Bangun

Indonesia (GAPENRI)

Association of Indonesian

National Engineering

Companies

Perkantoran

Buncit Mas Blok B

No.11 Jl.

Mampang

Prapatan Raya

No. 108 Jakarta

Selatan

Tel: (021) 7946375

Fax: (021)

7980554

[email protected]

d

10.

Asosiasi Perusahaan

Pengelola Alat Berat/Alat

Konstruksi Indonesia

(APPAKSI)


Construction Equipment

Hire and Rent

Jl. Kelapa Molek

IV Blok V-2 No.24

Kelapa Gading

Jakarta 14240

Tel: (021)

45846516

Fax: (021)

45846516

[email protected]

11.

Asosiasi Pengembang

Perumahan dan

Pemukiman Seluruh

Indonesia (APERSI)

Gedung Wakita

Karya Jl. Biru Laut

X/Kav 10-A Lt.1

Tel: (021) 8508533

Fax: (021)

8508534

dpp.apersindo@yaho

o.com




House and Real Estate

Developer

12. Asosiasi Produsen Tiang

Beton Pratekan Indonesia

(APTI)


Pole Concrete Producer

TWINKC Centre

Lt. 8 Jl. Kapten

Piere Tendean

No.82 Jakarta

12790

Tel: (021) 7984655

Fax: (021)

7984655

[email protected]

13. Gabungan Pelaksana

Konstruksi Nasional

Indonesia (GAPENSI)

National Contractors

Association Of Indonesia

Jl. Raya

Ragunan No.

C/1, Jatipadang

Ps. Minggu,

Jakarta 12540

Tel: (021)

78847247,

78847248

Fax:

(021)78847251

[email protected]

14.

Assosiasi Kontraktor Lsitrik

Indonesia (AKLI)

The Association Of

Indonesian electrical

Contractors

Komplek

Perkantoran

Kebayoran

Indah Blok B No.

3, Jl. Ciledug

Raya No.10

Jakarta Selatan

Tel: (021)

7268491-2

Fax: (021)

7230329

[email protected]

15.

Asosiasi Kontraktor Air

Indonesia (AKAINDO)

The Association of

Indonesian Water Works

Contractor

Komplek Ruko

Perkantoran Jl.

Raden Saleh

Raya No. 18L

Jakarta 10430

Tel: (021) 3162871

Fax: (021)

3162873

akaindopusat@yahoo.

com

16.

Persatuan Perusahaan

Real Estat (REI)

Rukan Simprug

Indah Jl. Tenku

Tel: (021)

72789105

[email protected]



Indonesian Real Estate

Association

Nyak Arief No. 9B

Kebayoran

Lama, Jakarta

12220

Fax: (021)

72789155

17.

Fiber Cement

Manufacturer Association

(FICMA)

Ruko Golden

Trully D'Best Blok

E 11 Lt. 2 Jl. RS

Fatmawati

Tel: (021)

75910037

Fax: (021)

75910042

[email protected]

18. Asosiasi Semen Indonesia

(ASI) Indonesian Cement

Association

Gedung Irama

Lt. 11 Jl. Rasuna

Said Blok X-1

Jakarta 12950

Tel: (021)

5261105-6

Fax: (021)

5261107-8

[email protected]

.id

19.

Perhimpunan Agen

Tunggal Alat-Alat Berat

Indonesia (PAABI)


Sole-Agents for Heavy

Equipment Agent

Gedung Putra

Kalimantan

Lt.VI/5 Jl. Jend.

Gatot Subroto

Kav. 12 Jakarta

Selatan

Tel: (021) 5277150

Fax: (021)

5277150

[email protected]

20.

Asosiasi Industri Alat Besar

Indonesia (HINABI)

Heavy Equipment

Manufacturer Association

Of Indonesia

Jl. Raya Cakung

Cilincing Km 4

Jakarta 14140

Tel: (021) 4400611

Fax: (021)

4400616

21.

Asosiasi Pengerjaan

Logam dan Permesinan

ASOSIASI (ASPEP)

Jl. Raya Rawa

Buaya No. 6

Jakarta Barat

Tel: (021) 5401188

- 89

Fax: (021)

[email protected]



Indonesian Association of

Metal Work and

Machinery

11740 6191739

22.

Asosiasi Perusahaan

Inspeksi Teknik Indonesia

(APITINDO)


Technical Inspection

Agencies

Epicentrum Walk

Strata Offices,

Komplek Rasuna

Epicentrum

Menteng Atas

Setiabudi

Jakarta Selatan

Tel: (021) 2994

1205 / 9474 7172

Fax: (021) 2994

1206

[email protected]

23.

Asosiasi Industri dan

Perdagangan Mesin

Konstruksi Indonesia

(AIMKI)

Indonesian Association Of

Machine Construction

Industry and Trade

Jl. Griya Jatisari

Tengah I Blok DU

10/15

Jakasampurna,

Bekasi Barat

17145

Tel: (021) 8840729

Fax: (021)

88964721

[email protected]

24.


Steel Structure (APKOBI)

Adhi Graha

Building Lt. 10

(Gedung

Surveyor

Indonesia) Jl.

Gatot Subroto

Kav. 56 Jakarta

selatan 12950

Tel: (021)

57930883

Fax: (021)

57930883

[email protected]

[email protected]

om

25.

The Indonesian Iron and

Gedung

Tel: (021)

executive_director@iisi



Steel Industry Association

(IISA)

Krakatau Steel,

Lantai 4 Jl. Gatot

Subroto Kav. 54

Jakarta Selatan

12950

5235655, 5235501

Fax: (021)

5235651

a.org

26.

Ikatan Arsitek Indonesia

(IAI)

Indonesian Institute of

Architects

Jakarta Design

Center Lt. 7

Jl. Gatot Subroto

Kav. 53,

Slipi, Jakarta

10260

Indonesia

Tel: +62 21

5304715

Fax: +62 2153047

22

[email protected]

27.

Asosiasi Semen Indonesia

(ASI)

Indonesia Cement

Association

Gedung Irama Lt

II E,

Jl. RH. Rasuna

Said Blok X-l

Jakarta 12950

Tel: 5261105-6

Fax: 5261107 - 8

[email protected]

.id

28.

Asosiasi Pertambangan

Batubara Indonesia (APBI)

Indonesian Coal Mining

Association

Menara

Kuningan Lt. 1

Jl. HR Rasuna

Said X-7 Kav. 5

Jakarta Selatan

Tel: 62 21

30015935

Fax : 62 21

30015936

[email protected]

29.

Asosiasi Independent

Surveyor Indonesia (AISI)

d/a Sucofindo

Center Lt III

Jl. Raya Pasar

Tel: 62 21

7983666 Ps. 1344

Fax : 62 21

customer.service@suc

ofindo.co.id




Independent Surveyors

Minggu Kav 34

Jakarta 12780

7986990,7983888

30. Asosiasi Industri Luminer

dan Kelistrikan Indonesia

(AILKI)

Association Of Indonesian

Lighting and Electrical

Industries

Komp.

Perkantoran

Duta Merlin Blok

B-34

Jl. Gajah Mada

No. 3-5

Jakarta 10130

Tel : 62 21

6334158

Fax : 62 21

6335382

dwi_dinamika@yahoo.

co.id

31.

Asosiasi Industri Mesin

Perkakas Indonesia

(ASIMPI)

Indonesian Machine Tool

Industries Association

Jl. R.E.

Martadinata No.

1 E

Jakarta 14430

Tel. : 62 21

6911220,

6911221

Fax. : 62 21

6902158

[email protected]

m

32.

Asosiasi Industri Peralatan

Pabrik Indonesia (AIPPI)


Manufacturing Equipment

Industries

Jl. Cianjur No. 4

Jakarta 10310

Tel./ Fax : 62 21

6398983

33.

Asosiasi Industri Mesin

Perkakas Indonesia

(ASIMPI)

Indonesian Machine Tool

Jl. R.E.

Martadinata No.

1 E

Tel. : 62 21

6911220, 6911221

Fax. : 62 21

[email protected]

m



Industries Association Jakarta 14430

6902158

34. Asosiasi Industri Rekondisi

Mesin & Peralatan

Indonesia (AIRMEPI)


Reconditioned Machine

and Equipment Industries

Jl. Cianjur No.4,

Menteng

Jakarta 10310

Telp. : 62 21

31923528,

31934205

Fax. : 62 21

3917341

35.

Asosiasi Pengerjaan

Logam dan Permesinan

(ASPEP)

Indonesian Association of

Metal Work and

Machinery Manufacturers

Jl. Rawa Buaya

No. 6

Jakarta 11740

Tel. : 62 21

6190745, 5401188

Fax. : 62 21

6191739

36.

Asosiasi Perusahaan

Tehnik Mekanikal dan

Elektrikal (APTEK)

Association of Mechanical

and Electrical Engineering

Companies

Perkantoran

Majapahit

Permai Blok

C/107

JI.Majapahit No.

18-20 Jakarta

Tel. : 62 21

3808767 -

3808768

Fax. : 62 21

3808770

[email protected]

m


6.2 GOVERNMENT BODIES

No Name Address Phone

Number Email

1.

Ministry of Finance

Jl. Lapangan

Banteng Timur

No.2-4

Jakarta 10710

Tel: 021-384

1067

Fax: 021-380

8395

[email protected]

2.

Ministry of Trade

M. I. Ridwan Rais

Road, No. 5

Central Jakarta

10110

Tel: 021-385

8337

Fax: 021-385

8337

[email protected]

3.

Ministry of Public

Work

Ruang Layanan

Informasi Publik

Gedung Utama

Lantai 1

Kementerian

Pekerjaan

Umum

Jalan Pattimura

No.20

Kebayoran Baru

Jakarta Selatan

Tel: 021-739

2262

[email protected]

4.

Ministry of

Manpower and

Jl. Jend. Gatot

Subroto Kav. 51

Tel: 021-522

9285

[email protected]


Transmigration Jakarta 12950 Fax: 021-797

4488

5.

Ministry of Foreign

Affairs

Jl. Taman

Pejambon No. 6

Jakarta Pusat

10110

Tel: 021-344

1508

Fax: 021-380

551

[email protected]

6.

Ministry of Home

Affairs

Jl. Medan

Merdeka Utara

No. 7

Jakarta 10110

Tel: 021-384

0058

Fax: 021-381

1120

[email protected]

7.

Ministry of Industry

Jl. Jend. Gatot

Subroto Kav. 52-

53

Jakarta 12950

Tel: 021-525

6548

Fax: 021-522

9592

[email protected]

8.

Ministry of Energy

And Mineral

Resources

Jl. Merdeka

Selatan 18

Jakarta 10110

Tel: 021-380

4242

Fax: 021-384

7461

[email protected]

9.

National

Construction

Services

Development Board

Jl. Alteri Pondok

Indah no. 82

Kebayoran

Lama Jakarta

Selatan 12160

Tel: +62-21-

7231556, +62-

21-7234482

Fax: +62-21-

7396974

[email protected]


10 State Minister for

Chairperson of The

National

Development

Planning Agency

Jl. Taman

Suropati No. 2

Jakarta 10310

Tel: 021-390

5650

Fax: 021-334

779

11.

State Minister for

Public Housing

Jl. Raden Patah

I No. 1 Lantai 2

Wing 4

Kebayoran Baru,

Jakarta -

Selatan

Tel: 021-739

7727

Fax: 021-739

7727

[email protected]

6.3 LIST OF RELATED AGENCIES


1.

Kamar Dagang dan

Industri Indonesia

(KADIN)

Indonesian Chamber

of Commerce and

Industry

Menara Kadin

Indonesia Lt. 29

Jalan HR Rasuna

Said X-5 kav 2-3,

Jakarta 12950 -

Indonesia

Tel: [62-21]-

5274484

Fax: [62-21]

5274331 -

5274332

sekretariat@kadin-

indonesia.or.id

[email protected]


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

Indonesia’s 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.

Indonesia’s 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,

including petroleum, tin,

natural gas, nickel, timber,

bauxite, copper, fertile soils,

coal, gold, silver

Weaknesses

1. Lack of skilled workforce

2. Poor transportation

infrastructure between islands

3. Low level of education, with

school life expectancy of 13

years (primary to tertiary

education)

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

new development and

technology

4. AEC (ASEAN Economic

Community), regional

economic integration by 2015

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

construction companies from

China, South Korea and Japan


NNootteess