Indonesia’s Construction Boom and Opportunity for Foreign Contractors

Indonesia’s construction sector is one of Southeast Asia’s fastest-growing markets. The government allocated 422.7 trillion rupiah (US$27.6 billion) to infrastructure in the 2024 State Budget, the largest amount in five years. The market is projected to expand from US$273.15 billion in 2024 to US$535.98 billion by 2030, with an annual growth rate of roughly 11 percent.

Construction currently contributes nearly 10 percent to Indonesia’s GDP, and foreign direct investment reached 219.9 trillion rupiah (US$13.7 billion) in Q1 2025, up 12.7 percent year-on-year.

This scale of investment creates significant opportunities for foreign contractors, particularly in capital relocation, transport, logistics, renewable energy, and urban housing.

For companies entering the market, the first decision is whether to establish a foreign investment company or operate through a representative office.

Foreign investment company: Establishing a permanent presence

A Foreign Investment Construction Services Company, known locally as a BUJK PMA, is a fully incorporated Indonesian limited liability company. It allows foreign contractors to bid for, sign, and execute projects under their name. This structure suits businesses aiming for a long-term presence and full contracting rights.

To establish a BUJK PMA, foreign investors must meet a minimum paid-up capital of 10 billion rupiah (US$606,000) and a total investment above 10 billion rupiah per KBLI classification, excluding land and buildings.

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Dezan Shira & Associates helps foreign contractors set up BUJK PMAs or representative offices, manage licensing, and stay compliant with Indonesia’s construction rules. Contact us to plan your market entry.

Most construction services are open to BUJK PMAs, though some small-scale activities are reserved for MSMEs. Until implementing regulations under Government Regulation No. 28 of 2025 (GR 28/2025) are issued, foreign ownership is effectively limited to 67 percent for non-ASEAN and 70 percent for ASEAN investors.

Representative office: A flexible, project-based option

A Foreign Construction Representative Office, or BUJKA RO, offers a lighter entry route for companies that want to participate in Indonesia without forming a permanent company. The representative office serves as the local liaison of the foreign parent and can only undertake projects through a mandatory joint operation (KSO) with a large, qualified Indonesian contractor.

A BUJKA RO has no paid-up capital requirement but must demonstrate financial capability of at least 2 billion rupiah for consulting services and 35 billion rupiah for construction and integrated works. It must appoint an Indonesian citizen as chief representative, employ more Indonesian than foreign personnel, prioritize domestic materials and technology, and show evidence of technology transfer to support local workforce development.

Licensing and transitional rules

Both BUJK PMAs and BUJKA ROs are licensed through the OSS-RBA system. They must obtain a Business Identification Number (NIB), a verified Standard Certificate (SS), and a Construction Business Entity Certificate (SBU). BUJK PMAs are required to maintain designated technical management roles. At the same time, BUJKA ROs must renew their Standard Certificate every three years and operate exclusively through joint operations with large Indonesian partners.

Following the enactment of GR 28/2025, which omits the detailed ownership and technical thresholds set under GR 5/2021, the Ministry of Public Works and Public Housing has informally confirmed that licensing procedures will continue to follow GR 5/2021 for a four-month transition period until the implementing regulation is issued.

Comparative Overview of BUJK PMA and BUJKA RO

Choosing the right structure

A BUJK PMA is suited for contractors planning multiple projects and sustained operations. It requires a higher upfront investment but provides full autonomy and contracting rights.

A BUJKA RO is better for companies testing the market or taking on a single high-value or donor-funded project. It carries lower capital commitments but limits independence through mandatory joint operations and requires careful partner selection to ensure compliance.

Executing your market entry strategy

After selecting the right structure, execution becomes key. BUJK PMAs must develop certified local teams, integrate with Indonesia’s competency and tax systems, and plan for profit repatriation and currency exposure. BUJKA ROs depend on seamless coordination between the foreign parent and Indonesian partner to meet technical and regulatory standards.

Both models require attention to workforce localization, environmental sustainability, and technology transfer obligations, which are central to Indonesia’s construction policy. Solid financial planning and strong local partnerships underpin long-term success.

Capturing Indonesia’s infrastructure opportunity

Indonesia’s construction market offers extensive potential for foreign contractors aligning business strategy with regulatory compliance. Whether through a BUJK PMA or a BUJKA RO, success comes from selecting the right entry model, building partnerships, and navigating licensing requirements effectively.

With the right structure and operational planning, foreign companies can secure a long-term role in one of Southeast Asia’s most ambitious infrastructure programs.

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