Enactment of GR 14/2021: An Update of Construction Services Implementation

Sep 21, 2021 | News

The Construction Services Sector is one of the areas of public works and public housing that must adjust to the ideals of Law No. 11 of 2020 concerning Job Creation (“Job Creation Law”).

Last February, the Government has issued Government Regulation No. 14 of 2021 concerning Amendments to Government Regulation No. 22 of 2020 concerning the Implementing Regulation of Law No. 2 of 2017 on Construction Services (“GR 14/2021”). GR 14/2021 was issued to follow up the Job Creation Law with several changes and innovations. Some of the discussions that are highlighted by us are as follows:

 

Obligation to Register the Experience of Construction Services Business Entity

That every Construction Services business entity must register the experience of the business entity to the Central Government through the Construction Services Development Agency (in Bahasa: Lembaga Pengembangan Jasa Konstruksi “LPJK”).[1] The recording of the experience of business entities consists of the information below:

  1. the work package name;
  2. the name of the employer;
  3. the name and portion of the capital distribution when conducting a joint operation (in Bahasa: Kerja Sama Operasi “KSO”);
  4. the duration and year of the implementation of the work;
  5. the work value;
  6. the minutes of the handover of the work; and
  7. the annual performance of the contractor.
  8. Obligation to Register Construction Workers Experiences

Each Construction Workers must register their professional experience to the Central Government.[2] The Construction Workers professional experience contains at least the following information:

  1. the types of professional services provided;
  2. the value of construction work related to the results of the professional services;
  3. the duration and year of the implementation of the work; and
  4. the name of the employer.
  5. Foreign Construction Labor Recording Obligations

Foreign Construction Workers who can perform Construction Services are only open to expert qualifications with certain positions that can be occupied as stipulated in the labor-related laws and regulations.[3]

Before performing Construction Services, foreign Construction Workers must carry out a registration to the Minister of Public Works and Housing through the LPJK through the integrated Construction Services Information System.[4]

 

Technology Transfer

Foreign Construction Workers in the position of Expert Qualifications are obliged to carry out the transfer of knowledge and transfer of technology to the companion worker.[5]

The implementation of technology transfer is carried out with the following conditions:[6]

  1. preparing a profile of the use, utilization and development of the technology to be provided to the cooperation partner(s) and/or work owner(s) in Indonesian and English;
  2. providing skills and management training for Indonesian understudies and skilled Indonesian manpower at least once for each work project; and
  3. facilitating Indonesian citizens to obtain training, perform practical work and/or academic research in work projects that the business entities are undertaking.

The terms of technology transfer at points a to point c above must be contained in the contract document.[7]

 

Certification Obligations of Construction Services Business Entity

That every business entity that performs Construction Services must obtain a Business Entity Certificate.[8] The Certificate of Business Entity is issued by the he Business Entity Certification Bodies (in Bahasa: Lembaga Sertifikasi Badan Usaha Jasa Konstruksi “LSBU”).[9]

 

Implementation of KSO

Construction Service Providers may perform KSO.[10]  KSO is business cooperation between business actors for which each party has clear rights, obligations, and responsibilities under written agreements.[11] KSO implementation may be carried out under the following conditions:[12]

  1. a contractor with a large-scale qualification and another contractor with a large-scale qualification;
  2. a contractor with a medium-scale qualification and another contractor with a medium-scale qualification;
  3. a contractor with a large-scale qualification and a contractor with a medium-scale qualification;
  4. a contractor with a medium-scale qualification and a contractor with a small-scale qualification; or
  5. a contractor with a small-scale qualification and another contractor with a small-scale qualification.

KSO cannot be implemented if:[13]

  1. a contractor with a large-scale business and a small-scale business qualification; or
  2. a contractor with a small-scale business and a small-scale business qualification for construction work.

In implementing KSO, one of the business entities of KSO members must be the leader of KSO (lead firm). KSO leader (lead firm) must have qualifications at a level or higher than KSO member business entities with a majority capital portion and at most 70% (seventy percent).[14]

In the case of KSO conducted between the national Construction Services business entity and the representative office of foreign Construction Services business entity is carried out with the principle of equality of large qualifications, similarity of sub-classification, and rent responsibility.[15]

 

Sustainable Construction

The implementation of Construction Services to build buildings and/ or civilian buildings must meet the principles of Sustainable Construction.[16]

Sustainable Principles includes:[17]

  1. the resemblance in purpose, comprehension, and action plan;
  2. compliance to security, safety, health, and sustainability standard (Standar Keamanan, Keselamatan, Kesehatan, dan Keberlanjutan);
  3. reduce the utilization of resources, including land, material, water, natural resources, as well as a human resource;
  4. reduce physical and non-physic waste;
  5. reusing the used resources;
  6. utilization of recycled resources;
  7. protection and management of the environment through conservation efforts; and
  8. risk mitigation of safety, health, climate change, and disaster.

The stages of construction include:[18]

  1. general planning;
  2. programming;
  3. implementation of Construction Consulting; and
  4. implementation of construction work.
  5. Transition

GR 14/2021 has been in force since February 2, 2021.[19] By the time GR 14/2021 takes effect, all implementation provisions of Government Regulation No. 22 of 2020 on The Implementation Regulation of Law No. 2 of 2017 on Construction Services (“GR 22/2020”), remain in force as long as the provisions are not contradictory.[20]

 

 

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[1] Article 6V paragraph (1) and paragraph (2) GR 22/2020, inserted through Article 1 number 3 GR 14/2021

[2] Article 6W paragraph (1) GR 22/2020, inserted through Article 1 number 3 GR 14/2021

[3] Article 28E paragraph (2) GR 22/2020, inserted through Article 1 number 12 GR 14/2021

[4] Article 28E paragraph (3) PP 22/2020, inserted through Article 1 number 12 PP 14/2021

[5] Article 28E paragraph (5) GR 22/2020, inserted through Article 1 number 12 GR 14/2021

[6] Article 70B paragraph (1) PP 22/2020, inserted through Article 1 number 12 PP 14/2021

[7] Article 70B paragraph (2) PP 22/2020, inserted through Article 1 number 12 PP 14/2021

[8] Article 41 paragraph (1) pp 22/2020, as amended by Article 1 number 16 PP 14/2021

[9] Article 41 paragraph (2) pp 22/2020, as amended through Article 1 number 16 PP 14/2021

[10] Article 70C paragraph (1) PP 22/2020, inserted through Article 1 number 12 PP 14/2021

[11] Article 1 number 57 PP 22/2020, as amended through Article 1 number 1 PP 14/2021

[12] Article 70C paragraph (2) PP 22/2020, inserted through Article 1 number 12 PP 14/2021

[13]Article 70C paragraph (3) PP 22/2020, inserted through Article 1 number 12 PP 14/2021

[14] Article 70C paragraph (4) and paragraph (5) pp 22/2020, inserted through Article 1 number 12 PP 14/2021

[15] Article 70D paragraph (1) PP 22/2020, inserted through Article 1 number 12 PP 14/2021

[16] Article 84 paragraph (1) PP 22/2020, as amended through Article 1 number 28 PP 14/2021

[17] Article 84 paragraph (3) pp 22/2020, as amended through Article 1 number 28 PP 14/2021

[18] Article 84 paragraph (6) pp 22/2020, as amended through Article 1 number 28 PP 14/2021

[19] Article 2 PP 14/2021

[20] Article 178A PP 20/2021, inserted through Article 1 number 45 PP 14/2021