Veronica Tampubolon
Partner
INDPEX Law Firm
veronica@indpex.com
A: Suite 305, 3rd Floor,
Graha Mampang
Jl. Mampang Prapatan Raya
Kav 100 Jakarta Selatan – Indonesia
T: +6221 5790 4171 M: +62 811 896846
W: indpexlaw.co.id
To spur economic growth in Southeast Asia’s largest economy, the Indonesian Government recently announced the increase of infrastructure funding to approximately USD 22.9 billion in the 2016 State Budget. Construction of roads, railways/MRT and airports are part of the 225 strategic projects listed by the Government, paving the way for potential investments in the construction sector.
Foreign Investment Potentials in Indonesia’s Construction Sectors.
Recently, the Government enacted Presidential Regulation Number 44 Year 2016 whereby the Government opens various sectors for 100% foreign ownership, include toll road operators, cold storage, film processing, tourism etc. Nevertheless, construction sectors are conditionally open for foreign investment, namely construction service (contractor) and consultancy with high technology, high risks and/or work value of more than IDR50 billion (contractor) or IDR10 billion (consultancy) are open for foreign investment up to 67% or 70% for ASEAN investors. Alternatively, foreign contractors may participate in the projects by forming a Joint Operation or Public-Private Partnership under Regulation of Ministry Public Works No. 10/PRT/M/2014 or Presidential Regulation No. 38 of 2015. There are risks with the Indonesian construction projects, such as limited qualified Indonesian contractor and contracts must be in Indonesia or dual languages. Investors interested in the construction sectors, must be legally advised by an Indonesian lawyer.
Dispute Resolution on Construction Sectors.
The main issues for construction services in Indonesia involve the practical implementation of construction laws and regulations. INDPEX provides assistance in processing construction permits or managing/administering various construction contracts and their compliance.
Dealing with construction dispute in Indonesia, there is no special court or tribunal. The parties have discretion to decide the venue and procedure for dispute resolution. It may be done through the Indonesian or foreign courts or arbitration. Generally, foreign contractors prefer arbitration, rather than Indonesian court, to settle construction disputes. In Indonesia, Arbitration is governed under Law Number 30 Year 1999. Currently, Indonesia has various arbitration institutions and in many cases construction disputes are settled by the Indonesian National Arbitration Body (BANI) and the Indonesian Arbitration and Alternative Dispute Resolution for Construction (BADAPSKI).
Indonesia recognizes the enforcement of foreign arbitral awards and is a party to the 1958 New York Convention.
Specifically for the construction sectors, INDPEX is experienced in advising its foreign clients in the construction dispute resolution either in the court or arbitration, as well as in executing the Arbitration Award in Indonesia.
