Background Regulation published by the Minister of Public Works or also renowned as Permen PU No. 11/2014 happens to be the regulation which controls the management of rainwater on buildings and its land. This regulation is the application of the previous laws which...
The increasing scarcity of land that can be used for commercial purposes in a city center such as Jakarta, requires efficient management of construction development in the city center. To realize sustainable development, and use the available land efficiently, a...
Background
Construction service is one of the activities in the field of economy, social and culture which has important role in the achievement of various objectives to support the realization of the national development goals. Therefore, the implementation of construction services needs to be regulated to carry out the orderly of the construction work. Construction services are stipulated under the Law Number 18 of 1999 on Construction Services (“Law No. 18/1999”) and Government Regulation Number 29 of 2000 on Implementation of Construction Services (“PP No. 29/2000”) jo. Government Regulation Number 59 of 2010 on Amendment of PP No. 29/2000 (“PP No. 59/2010”).
In a construction work, there are 2 (two) parties that are involved , namely the service user and the service provider. The service user and service provider are bound in a working relation of construction services, provided that such working relation is set out in a construction work contract.
Construction Work Contract
Based on Article 1 of Law 18/1999, construction work contract is the overall document regulating legal relationship between the service user and the service provider to implement the construction work. Basically, the construction work contract is made separately according to the stages in the construction work, which consists of the construction work contract for the construction work planning, construction work performance, and construction work supervision.
Referring to Article 23 paragraph (6) of PP No. 29/200, the construction work contract is subject to the applicable law in Indonesia. The construction work contract is made in Indonesian language. In the event that the construction work contract with foreign parties, it could be made in Indonesia language and English language (dual language).
According to PP No. 29/2000, construction work contract is divided by:
forms of compensation, which consists of a lump sum, unit price, additional fee to the services, the combination of lump sum and unit price, or alliances;
period of the construction work, which consists of a single year, or multi-year;
terms of payment for the works, in accordance with the progress of the work, or at regular intervals.
As a minimum, a construction work contract shall include description on:
the parties, clearly stipulating their identities;
work description, clearly stipulating in detail of the work’s scope, work’s value, and performance period;
coverage and/or maintenance period, stipulating the provision of the period of coverage and/or maintenance which is the responsibility of the service provider;
experts, stipulating the provision of number, qualification, and classification of experts to perform the construction work;
rights and obligations, which is stipulating the provision of the rights of the service user to receive the results of the construction work and its obligation to comply with the agreed provisions, and also the rights of the service provider to get information and compensation, and its obligations to perform the construction work;
terms of payment, stipulating the provision of service user’s obligation in carrying out the payments for the results of construction work;
default, stipulating the provisions of responsibilities in the event either party fails to carry out its obligations as agreed upon;
dispute settlement, stipulating the provisions of the procedure of the settlement of dispute due to disagreements;
termination of construction work contract, stipulating the provisions of the termination of construction work contract, caused by the inability of either party to perform its obligations;
force majeure, stipulating the provisions of the circumstances arising beyond the intent or capability of the parties, which is inflicting losses to either party;
construction failure, stipulating the provisions of the obligations of the service provider and/or service user on the failure of a construction;
workers protection, stipulating the provisions of the parties’ obligations in the safety, occupational well-being, and social security;
environmental aspect, stipulating the provisions of the parties’ obligations to comply with the applicable environmental law.
Construction work contract also shall contain provisions on intellectual property right, which includes:
ownership of the planning result, based on the agreement, and
fulfillment of the obligations of the copyright on the planning result that has been owned by its holders and patent rights that has been owned by its holders, in accordance with the laws on copyright and the laws on patent.
Construction work contract may also contain the parties’ agreement on incentives, provided that the incentives may be in monetary form or other forms. Incentive is the award that is given to the service provider for his achievements, among others, the ability to finish the works earlier compared to the agreed period, while maintaining the quality as required as set out in the construction work contract.
Isrilitha Pratami Puteri
According to the Regulation issued by State Minister for Public Works Number 28/PRT/M/2006 Year 2006 (“Minister Regulation”), it is allowed for the representative of foreign construction legal entities (“Foreign Entities”) to conduct their business in Indonesia after fulfilling some requirements.
On 12 January 2011, the Government issued the Law Number 1 of 2011 on Housing and Habitation (“Housing Law”). By the issuance of this law, the existed law on housing Number 4 of 1992 has been revoked. This new Housing Law is divided into 2 (two) parts i.e. housing and habitation. The purpose of this Housing Law is to fulfill the public needs for housing.
Background
According to Law Number 18 of 1999 on Construction Services, construction services is consultancy services of construction work planning, services of construction work performance, and services of construction work supervision. Construction has a very important role in achieving various aims in order to support the objectives of national development. The construction services are carried out by the construction services provider, in the form of individuals or business entities, whereas such business entities are divided into 2 (two) classifications, that is, (i) national business entities; and (ii) foreign business entities. In order to perform the construction services, there are some requirements in order to obtain the business license of construction services that must be fulfilled by the business entities as the construction services provider (the “License”).
Regulations
There are some regulations that are related to the License for construction services provider in the form of national business entities (the “Business Entities”), such as:
Law Number 18 of 1999 on Construction Services;
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 (“PP 28/2000 jo. PP 4/2010”); and
Decree of Minister of Habitation and Regional Infrastructure Number 369/KPTS/M/2001 on Guidelines of Licensing for National Construction Service Business (“Kepmen 369/2001”).
Licenses
Each Business Entities shall have the business License issued by the Regional Government where the Business Entities are located. The License shall be obtained by the Business Entities in order to perform or conduct the construction services in all regions of Republic of Indonesia. The License which has been given to the Business Entities is valid for 3 (three) years and can be extended. According to Article 14 of PP 28/2000 jo. PP 4/2010, the License will be given to the Business Entities, which have fulfilled the requirements, such as:
(i) Have the registration certificate of business entities issued by the Certification Unit of Business Entities (the “Unit”) which is formed by the Agency of Construction Services Development (the “Agency”)
The registration means an activity in order to determine the competent of skill and expertise of the profession of the individuals or business entities; an activity in order to determine the business license in accordance with the classifications and qualifications which are embodied in the certificate issued by the Unit.
(ii) Completed the requirements provided by other prevailing laws and regulations related to the business activity.
The specific requirements in obtaining the License for the Business Entities are set out in Kepmen 369/2001. In order to obtain the License, the national business entities shall apply through certain form as stipulated in the attachment of Kepmen 369/2001 to the Regional Government, that is, Regent/Mayor or appointed Officer. The application shall be enclosed with:
(i) the copy of the business entities certificate that has been registered by the Unit;
(ii) the copy of the receipt of the application administration fee payment;
(iii) other administration requirements that is regulated by the Regional Government in accordance with the prevailing laws and regulations; and
(iv) each License will be given code number in accordance with the guidance of numbering of License as stipulated in the attachment of Kepmen 369/2001.
Other technical matters in relation to the granting of License are further stipulated by the Regional Government.
Sanction
In relation to the violation of License, the Regional Government Regulation shall stipulate the administration sanction in accordance with Article 35 paragraph 1 of PP 29/2000 jo. PP 4/2010, such as (i) written warning; (ii) suspension of business and/or profession license; (iii) revocation of business and/or profession license.
Helen Taurusia, SH
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
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