July 28, 2020 | Regulatory Updates

Recently, President Joko Widodo signed off Government Regulation No. 22 of 2020 concerning the Implementation of Construction Services (“GR No. 22/2020”) which became effective as of 21 April 2020.

Government Regulation No. 22/2020 is the implementing regulation for Law No. 2 of 2017, which shall serve to provide more details about the selection process of 'Service Providers' for the Indonesian's constructions projects sector.

Government Regulation No. 22/2020 stipulates that any construction work that utilizes state fund shall be carried out through one of these following discretion processes: 

(i) Tender or selection; 

(ii) Direct appointment; 

(iii) Direct procurement; and 

(iv) Electronic procurement. 

Based on the chosen mechanism, Government Regulation No. 22/2020 also elaborates further on the specific requirements that are to be carried out should the selection be done either through the direct appointment or the direct procurement route.

If and when a construction project involves foreign workers and that the foreign-workforce employer does not have a Foreign-Worker Recruitment Plan and Foreign-Worker Recruitment Permit;

Then, as per according to Government Regulation No. 22/2020, the Ministry of Public Works and Public Housing has the authority to impose administrative sanctions on the employer, either through a temporary suspension of the company's construction services activities and/or the inclusion of the company in to the government's blacklist.