New Regulation Allows Direct Appointment of Regional-Owned Enterprises for Construction Projects

Construction

By Ira A. Eddymurthy and Awang Fahrizal

The Indonesian government recently issued Government Regulation No. 54 of 2016 regarding the Third Amendment to Government Regulation No. 29 of 2000 regarding the Implementation of Construction Services (“Third Amendment”).

The Third Amendment introduces additional provisions similar to those in the previous amendment, namely Government Regulation No. 79 of 2015 regarding the Second Amendment to Government Regulation No. 29 of 2000 regarding the Implementation of Construction Services (“Second Amendment”). This Second Amendment allowed state-owned enterprises (“SOEs”) to be directly appointed to Government construction projects without having to go through a public tender, limited tender or direct selection process. This provision on direct appointments applies to business activities that fall under construction consultation and supervision, construction implementation, and integrated construction services.

The newly issued Third Amendment introduces a provision that allows Regional-Owned Enterprises (“ROEs”) the same treatment as SOEs. This means ROEs can be directly appointed to national strategic projects by Regional Governments without having to go through a public tender, limited tender or direct selection process.

Furthermore, under the Third Amendment, ROEs that are directly appointed to projects by Regional Governments can then appoint other ROEs, subsidiaries of ROEs, SOEs and/or subsidiaries of SOEs to carry out the concerned national strategic projects.

These additional provisions under the Third Amendment apply to the same types of construction services as stipulated above, i.e., construction consultation and supervision, construction implementation, and integrated construction services.

This Third Amendment has been in force since November 22, 2016.

This publication is intended for informational purposes only and does not constitute legal advice. Any reliance on the material contained herein is at the user’s own risk. You should contact a lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and may not be reproduced without the express written consent of SSEK.

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