Licenses

Legal Aspect of Construction Services According to Law No. 18 of 1999 – Indonesia

Construction services hold a very important and strategic role in achieving various aims in order to support the objectives of national development to realize a fair and prosperous society both materially and spiritually based on Pancasila and the 1945 Constitution. Therefore, it is necessary to arrange a specific regulation of construction services, which is now set under the Law Number 18 of 1999 on Construction Services (“Construction Services Law”).

Overview of Construction Services
Construction services is consultancy services of construction work planning, services of construction work performance, and services of construction work supervision. The parties in a construction work consist of service user and service provider. Construction services are carried out by the construction services provider, in the form of individuals or business entities. Construction services that carried out by individuals as the service provider can only perform the low risk construction work, with simple technology, and low cost. Meanwhile, the high risk construction work and/or high technology and/or high cost can only be performed by limited liability companies or the equivalent foreign corporations.

License for Construction Services Provider
Construction services provider in the form of business entities shall (i) comply with the provisions of business license in the field of construction services; (ii) possess certificate, classification, and qualification of a construction service company. A classification and qualification standard of proficiency is an acknowledgment of the proficiency level of every business entities both national and foreign in the field of construction services business. Such acknowledgment is obtained through a test(s) carried out by an institution assigned to perform it. The process of obtaining such acknowledgment is through a registration activity comprising classification, qualification, and certification. Therefore, only certified business entities that are permitted to work in the field of construction services business.

The business license of construction services has been further stipulated in Article 14 of Government Regulation Number 28 of 2000 on Business and Society of Construction Services Role (“PP 28/2000”) jo. Government Regulation Number 4 of 2010 on Amendment of PP 28/2000 and Decree of Minister of Settlement and Regional Infrastructure Number 369/KPTS/M/2001 on Guidelines of Licensing for National Construction Service Business.

Construction Work Binding
Binding in construction services work relationship is established based on the healthy competition principle in the selection of service provider through public or limited tender, and in certain conditions, the selection of service provider may be carried out through direct selection or direct appointment. The selection of service provider shall consider the conformity of field business, the balance between capability and workload, and performance of the service provider. Business entities owned by the same person or a group or in the same management are not entitled to join the tender for one construction simultaneously. The procedure of service provider selection has been further stipulated in Government Regulation Number 29 of 2000 on Construction Services Performance (“PP 29/2000”) jo. Government Regulation Number 59 of 2010 on Amendment of PP 29/2000.

Construction Work Contract
The regulation of work relationship between the service user and the service provider shall be set forth in a construction work contract. A construction work contract is made in Bahasa Indonesia and with regards to construction work contract with foreign parties, it could be made in Bahasa Indonesia and English.

As a minimum, a construction contract shall consist of description on (i) the parties; (ii) work description; (iii) liability and/or maintenance period; (iv) experts; (v) rights and obligations; (vi) terms of payment; (vii) event of default; (viii) dispute settlement; (ix) termination of the construction work contract; (x) force majeure; (xi) construction failure; (xii) workers’ protection; (xiii) environmental aspect. In relation to construction work contract on planning works, it shall contain provision of the intellectual property rights.

The description of work description comprises scope of work, work value, and the performance time limit. The scope of work comprises (a) work volume, is the amount of work to be performed; (b) administrative requirement, is a procedure that had to be complied with by the parties in conducting interaction; (c) technical requirement, is the technical provisions that had to be complied with by the service provider; (d) liability or guarantee, is a form of protection, among others for work performance, receipt of the down payment, accidents of workers and the society; (e) report of the result of construction work, is the result of work progress set forth in a written document.

Value of work, is the amount of costs to be received by the service provider of the performance of the entire work scope. The performance time limit is the period of time to complete the entire work scope including the maintenance period.

The Society and the Construction Services Society Roles
The society has roles in the performance of construction work, such as (i) supervising, to realize the orderly performance of construction work; (ii) receive a reasonable compensation for losses that occurred directly due to the performance of such construction work; (iii) maintain order and comply with the prevailing provisions in the aspects of construction work performance; (iv) participate in preventing any construction work that endangering the public interest.

The construction services society is a part of the society having its interests and/or activities related to construction services business and work. The construction services society is carried out through a construction services forum, performed by an independent and self reliant institution. Such forum has and upholds their code of professional ethics. The role of the construction services society has been further stipulated in PP 4/2010.

The Government Role
The government also has a role in the performance of construction work, that is conducting the development of construction services. Such development is carried out in the form of regulating, empowering, and supervising. The regulating function is carried out by issuing laws and regulations and technical standards. Meanwhile, the empowering function is performed on construction services business and on the society in order to develop its conscience of rights, obligations, and its roles in the performance of construction services. Furthermore, the supervising function is performed on the performance of construction work in order to ensure the realization of orderly construction services in accordance with the prevailing laws and regulations. The performance of the development may be carried out together with the construction services society. Such development has been further stipulated in Government Regulation Number 30 of 2000 on Performance of Construction Services Development.

Class Action
There is a possibility that the society suffers losses due to the performance of construction work. Therefore, the society has a right to file a class action. A right to file a class action means a right of a small group of the society to act on behalf the society in large numbers that has suffered losses, based on the same issues, legal factors, and conditions due to the losses or disruption as the result of the construction work performance.

Sanction
The administrative sanctions may be imposed for the violation of Construction Services Law, in the form of (i) written warning; (ii) temporary termination of construction work; (iii) restriction of business activities and/or profession; (iv) temporary prohibition on the use of the construction work result (limited to the services user); (v) suspension of business and/or profession license; (vi) revocation of business and/or profession license. In addition to the administrative sanctions, the performer of the construction work may be subject to a sentence of a maximum 5 (five) years imprisonment or subject to a fine sanction in a maximum of 10% (ten percent) of the contract value.

Helen Taurusia, SH

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Building Construction Permit in Jakarta

Building Construction Permit in Jakarta

Background

As the capital city of state of Indonesia, Special Capital Region of Jakarta (“Jakarta”) is a center of economic and trade center in Indonesia, which located in the west island of Java. Furthermore, as the central of government of Indonesia, Jakarta is also occupied by buildings that serve as the center of government offices, residential homes, and places of business. Aside to having been regulated on the laws and regulations on building structure establishment permit, and regulations pursuant to buildings and structures, buildings in the Jakarta area are specifically regulated in the Regulation of Jakarta Special Capital City Region Number 7 of 1991 on Building in the Special Capital City Region of Jakarta (“Regulation of DKI No. 7 of 1991”).

Building Construction Permit

The building constructions in Jakarta area can be conducted by firstly obtaining its permit from the Governor of the Special City Region of Jakarta (“Governor”), in the form of Building Construction Permit (“IMB”). The IMB application shall be made by written form to the Governor and submitted through the Section of Sub-District Office (Seksi Dinas Kecamatan) or Department of Sub-District Office (Suku Dinas Kecamatan). The Governor may refuse the IMB application, if the construction of building (i) is violating or harming the public interest, (ii) would harm the interest of local communities, such as endangering the health or environment harmony, and, (iii) has not perform the written instruction, as the condition of application process. The IMB shall be revoked, if the building construction has not been implemented within a period of 6 (six) months from the issuance of the permit, or in the event of the building construction is not continued, except it is notified by written notice by the permit holder.
Prior to the issuance of IMB, Section of Sub-District Office or Department of Sub-District Office may issue the Preliminary Permit (Izin Pendahuluan). Preliminary Permit is the permit which is given to build, accordance to the stages of building construction activities, while waiting the definitive permit. Preliminary Permit is specifically regulated in the Decision of Governor of the Special Capital City Region of Jakarta Number 76 of 2000 on the Procedures on Obtaining Building Construction Permit, Building Utilizing Permit (Izin Penggunaan Bangunan), and Building Utilize Feasibility (Kelayakan Menggunakan Bangunan), Governor Regulation of the Special Capital City Region of Jakarta Number 85 of 2006 on the Issuance Services of Building Construction Permit, Decision of Governor of the Special Capital City Region of Jakarta Number 147 of 2000 on the Delegation of Authority Service of Determination of City Plan and the Issuance of Preliminary Permit of Building Construction in the Province to Sub-District Office in Special Capital Region of Jakarta Province, as far as on the Issuance of Preliminary Permit on Building Construction.

Preliminary Permit is divided into 4 (four) parts, i.e. Preparation Preliminary Permit (Ijin Pendahuluan Persiapan), Comprehensive Preliminary Permit (Ijin Pendahuluan Menyeluruh), Comprehensive Structure Preliminary Permit (Ijin Pendahuluan Struktur Menyeluruh), and Foundation Preliminary Permit (Ijin Pendahuluan Pondasi).

Building Construction

Each building shall comply with the administrative and technical requirements in accordance with the function of the building. Having specifically regulated in the regional regulation of Jakarta, the technical and administrative requirements of building are also guided by other regulations on building structure, for example, Law Number 28 of 2002 on Building, Regulation of the State Ministerfor Public Works Number 24/PRT/M/2007 on Technical Guidelines for Building Construction Permit, Regulation of the State Minister for Public Works Number 29/PRT/M/2006 on Guidelines of the Technical Requirements of Building Structure, and Regulation of Minister of Home Affairs of Republic of Indonesia Number 32 of 2010 on Guidelines of the Issuance of Building Construction Permit.

The administrative requirements of the building consists of (i) the status of the rights of the land, (ii) the status of building ownership, and (iii) the IMB, while the technical requirements of the building contains, (i) the requirements of building structure, and (ii) the reliability requirements of building. The building construction in Jakarta area should be conducted by contractors and supervised by the Supervisory Director. The Supervisory Director is a person or a group of experts/entities which is charged to supervise the implementation of building construction activities upon the appointment of the building owner, in accordance with theprovision that is stipulated in the building permits. To perform their duties, Supervisory Director should have a work permit and responsible for the implementation of building construction activities.

Furthermore, having already supervised by Supervisory Director, all the construction activities in Jakarta area was also monitored by the Supervision Department of City Development (Dinas Pengawasan Pembangunan Kota). Supervisory Director of a building construction has an obligation to report each result of stage of its construction activities to the Head of Supervision Department of City Development. Each design and construction plan shall comply with the technical requirements, which also considering the security, safety, the suitability of building and environment from the side of architecture, construction, installation and building equipment, including safety on the fire prevention.

Design or building plan shall be made and accountable by the experts that have aduty to designing and planning the building and obtaining a written work permit from the Governor. Plan Drawing and Building Planning consists of (i) architectural drawing plan, and/or (ii) drawing and structural calculation, and/or (iii) drawing and its installation calculation and equipment of building, and/or, (iv) drawing and another calculation which have been fixed. The Expert who had a duty to design and plan the drawing and structure calculation, should had to adjust its drawing and structure calculation, and shall not deviate from the architectural drawing. The building owner is having an obligation to inform the Head of Supervision Department of City Development in case there are replacements of the designer and/or building planning.

Criminal Provisions

The violation of any provisions stipulated in Regulation of DKI No. 7 of 1991 is subject to the imprisonment with maximum 3 (three) months, or fine in amount up to IDR. 50,000 (fifty thousand Rupiah), by or by not seizing or confiscating the equipment, which has been used to commit the violations of the provisions. In addition to the penalties above-mentioned, Governor may determine penalties in order to penalize the violations.

Ivor Ignasio Pasaribu

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Legal Aspects of Required Licenses for Development of Condominium

The interest to live in the condominium tends to increase particularly to people who live in the big cities. According to Article 7 Law Number 16 Year 1985 on Condominium, it is stipulated that the condominium can only be constructed over land of Right to Own (Hak Milik), Right to Build (Hak Guna Bangunan), Right to Use (Hak Pakai) on State Land or Right to Manage (Hak Pengelolaan). In the event the developer is formed as business entity in the form of Limited Liability Company, the possible land title for this legal entity is the Right to Build. According to Decree of State Minister for Public Housing Affairs Number 11/KPTS/1994 on the Guidance on Conditional Sale and Purchase of Condominium (Pedoman Pengikatan Jual Beli Satuan Rumah Susun) states the developer shall obtain the following licenses:

Principle License, means the license which must be owned by a person or legal entity that will utilize the space for large scale business;
Location Permit from Regency or Municipal Land Office, for DKI Jakarta known as License of Land Appointment and Utilization (Surat Izin Penunjukkan dan Penggunaan Tanah / SIPPT). This license is given to a company in order to obtain the land for investment which is also valid as the license in relation to transfer of right, and to utilize the land for investment. This license is issued by the competent authorities for the land utilization in main route or for the land utilization of more than five thousand (5,000) m2. The developer has to obtain SIPPT prior to conducting the building construction;
Building Construction Permit, means the license to construct. The Developer is responsible to obtain this license from the competent authorities. If the building does not have the building construction permit, it will be categorized as illegal building and the competent authorities have the right to seal and demolish it.
After the developer completes the construction process, there are several steps that must be passed by the developer before the Certificate of Right to Own on Condominium (Sertifikat Hak Milik atas Satuan Rumah Susun) unit is issued:
Detail of division (pertelaan), means boundaries designation for the condominium, common facility, common equipment and common land with the proportional comparative value in the form of picture and description. In brief, the process begins with the submission of application through National Land Agency to Governor, and followed by research by related institutions together with Head of National Land Agency. Based on the research report from related institutions, the Ratification Decision will be issued and ratified by the Governor for DKI Jakarta and Regional Government for other regions;
Occupancy Worthiness Permit (Izin Layak Huni) means the license issued by Regional Government after investigating the condominium of which its construction is already finished based on the requirements and issued licenses. In the event these licenses have not been issued but the condominium unit is already sold or occupied, according to Law Number 16 Year 1985 on Condominium, there is criminal sanctions of 1 (one) year maximum or a fine of Rp 1,000,000.00 (one million rupiah) maximum;
Deed of Separation of Condominium, this deed is a proof of the separation of condominium unit which includes common facility, common equipment and common land which is registered to the Land Agency which will be approved by the Governor. This deed is used as the basis to issue the Certificate of Right to Own Condominium Unit. According to Regulation of Head of the National Land Agency Number 2 Year 1989 on Form and Procedure and Registration of Deed of Separation of Condominium, it is stated that the Deed of Separation must be registered by the developer to Land Officer together with the Land Certificate and Occupancy Worthiness Permit;
Issuance of Certificate of Right to Own of Condominium Unit, the basis of certificate issuance is the information provided in deed of separation which already approved by Regional Government. In general, this certificate consists of the copies of book of land of right to own of condominium unit, measurement letter of common land and blueprint of condominium unit which clearly shows the location of condominium unit and its detail of division (pertelaan) on the amount of common facility, common equipment and common land which constitute as an integral and inseparable part.
Furthermore, according to Regulation of Head of the National Land Agency Number 4 Year 1989 on Form and Procedure for Book of Land and Issuance of Certificate of Right to Own of Condominium Unit, after the Certificate of Right to Own of Condominium Unit is issued, the land certificate must be deposited in the Land Office.

Jerry Shalmont

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Condominium Development Policy

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Housing and residence are every human being basic needs. With the increasing number of inhabitants, the land space provided becomes very limited. Because of that, houses are made in a multi-story structure or commonly known as condominium (rumah susun).

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