balivillacareHiring a builder for a Bali villa: licenses, the contract and the 10-year liability
Key takeaways
- A builder needs a business license, and for a company an SBU; its workers need an SKK competence certificate. Both are searchable on LPJK.
- The owner-builder relationship must be a written construction contract with set minimum contents; with a foreign party, Indonesian and English, Indonesian prevailing.
- The builder answers for building failure up to 10 years from final handover, where the planned life is longer; the period goes in the contract.
- Who is liable is decided by an expert assessor (penilai ahli).
- The owner is not a bystander: certified workers and safety standards are the owner's duty too.
Most villa owners choose a builder on price, portfolio and a recommendation. Indonesia's construction law adds a short list of things that can be checked — the company's certificate, its workers' certificates, what the contract must say — and one that matters years later: who pays when the building fails. This page reads the 2017 construction law as amended in 2023, its implementing regulations and the building regulation.
Seven words in a construction contract
The terms in the law and in the contract.
| Term | What it is | Why an owner meets it |
|---|---|---|
| Jasa konstruksi | Construction services. | What a builder sells. |
| SBU | Sertifikat Badan Usaha, the company certificate. | A construction company must hold one. |
| SKK | Sertifikat Kompetensi Kerja. | Each construction worker's certificate. |
| Kontrak kerja konstruksi | Construction contract. | Required, with set contents. |
| Kegagalan bangunan | Building failure. | Collapse or loss of function after handover. |
| Penilai ahli | Expert assessor. | Decides who is liable for a failure. |
| Pengawas konstruksi | Construction supervisor. | Reports each stage to the regency. |
What to check before signing
| What the law requires | Where | |
|---|---|---|
| Business license | Every individual or company providing construction services | UU 2/2017 Pasal 26 (amended) |
| SBU | Every construction company; searchable on LPJK | Pasal 30 (amended) |
| SKK for workers | Owner and builder must both employ certified workers | Pasal 70; Pasal 99(2) |
| Qualification | Individuals and small firms: low risk, simple technology, low cost only | PP 22/2020 Pasal 35 |
| Foreign-capital builder | Must meet large-qualification requirements | Pasal 34(2) (amended) |
| Design | By a certified design provider, except small houses | PP 16/2021 Pasal 252 |
| Supervision | By a supervision or construction-management provider | PP 16/2021 Pasal 264 |
Checking on LPJK
The construction services board publishes a company search (pencarian badan usaha) showing the business classification, issue and expiry dates and qualification, and a worker search by name (pencarian tenaga kerja). It also lists which certified people are attached to a company, and its expert assessors.
Qualification and the size of the job
Individual builders and small-qualification companies may work only where the job is low risk, simple technology and low cost (PP 22/2020 Pasal 35); medium and large companies take medium and high segments (Pasal 36-37). We found no rupiah ceiling for “low cost” in the regulations read. A company formed with foreign capital must meet large qualification requirements (UU 2/2017 Pasal 34(2)), which on our reading places it in the high segment.
Sanctions, and on whom
A business working without a license faces a warning, a fine or suspension (Pasal 89); a company without an SBU, a fine, suspension or blacklisting (Pasal 90). Employing uncertified workers draws a fine or suspension for the owner or the builder (Pasal 99(2)). We found no article sanctioning the owner for hiring an unlicensed builder — the risk to the owner is practical, not penal.
Choosing a builder, or mid-build?
Tell us where the villa is and what stage it is at. Five questions, and your details are the last step.
The contract
The relationship between owner and builder must be set out in a construction contract (Pasal 46), which must at least cover: the parties; the work — scope, value, unit or lump-sum price and time limit; the period of responsibility, including execution and maintenance; rights and obligations; the duty to employ certified workers; payment terms; breach; disagreements; termination; force majeure; building failure and its liability period; worker protection; third parties; environment; risk cover; and the dispute forum (Pasal 47). With a foreign party it is made in Indonesian and English, and the Indonesian prevails in a dispute (Pasal 50).
Maintenance and retention
For private work we found no statutory maintenance period: the contract must state it. PP 16/2021's 6-month minimum applies to state buildings. Retention money is not in the texts read; it is a contract term.
Design and supervision
Technical design must be done by a certified design provider (PP 16/2021 Pasal 252) — the owner may draw it only for a one-storey house up to 72 m² or two storeys up to 90 m². The owner applies for the PBG before construction starts (Pasal 253(4)). Supervision is by a construction supervision or management provider (Pasal 264(3)); the supervisor notifies the regency through SIMBG at each stage, work waits for the regency's inspection, and the supervisor issues the statement of fitness that leads to the SLF (Pasal 59-60).
When the building fails
Building failure is collapse or loss of function after final handover (PP 22/2020 Pasal 1). The builder must repair or replace a failure caused by its fault (UU 2/2017 Pasal 63), and is liable for the planned construction life — where that is longer than 10 years, for at most 10 years from final handover; after that the owner bears it (Pasal 65). The period must be in the contract, and the planned life in the design documents (PP 22/2020 Pasal 87).
| Who answers | Rule | |
|---|---|---|
| Construction to final handover | The builder, under the contract | Pasal 47 |
| Handover to end of liability period (up to 10 years) | The builder, for failures it caused | Pasal 63, 65 |
| After the liability period | The owner | Pasal 65(3) |
| Safety standards not met by either side | Owner and/or builder, as the assessor finds | Pasal 60 |
Who is liable is decided by an expert assessor (penilai ahli), appointed by the Minister within 30 working days of a report, and the owner may report a failure to the Minister (Pasal 60, 66). Liability can be passed to an insurer (PP 22/2020 Pasal 89).
What this page does not cover
- Construction prices or what a villa costs to build.
- Taxes on construction services.
- Any builder. We do not recommend or rate builders.
Common questions
What license should a Bali builder have?
A business license, and for a company an SBU (UU 2/2017 Pasal 26 and 30, as amended). Its workers need SKK certificates (Pasal 70). Companies and certified workers are searchable on LPJK's public site.
Is a builder liable after handover?
Yes. The builder is liable for building failure for the planned construction life; if that exceeds 10 years, for up to 10 years from final handover. The period must be stated in the contract (Pasal 65).
Does a villa construction contract have to be in writing?
The owner-builder relationship must be set out in a construction contract with listed minimum contents (Pasal 46-47). With a foreign party it is in Indonesian and English, Indonesian prevailing (Pasal 50).
Can the owner be sanctioned?
The owner, as service user, must employ certified workers and meet the safety standards; employing uncertified workers can draw a fine or suspension for owner or builder (Pasal 59, 96, 99). We found no sanction on the owner for the builder's missing license.
Is there a statutory maintenance period?
Not for private work in what we read: the contract must state the execution and maintenance period (Pasal 47). The 6-month minimum in PP 16/2021 applies to state buildings.
Sources cited on this page
- UU No. 2 Tahun 2017 — construction services
- UU No. 6 Tahun 2023 — Pasal 52, amending UU 2/2017
- PP No. 22 Tahun 2020 — Pasal 35-37, 86-89
- PP No. 14 Tahun 2021 — Pasal 85
- PP No. 16 Tahun 2021 — Pasal 59-60, 252-253, 264
- LPJK — public search, construction companies
- LPJK — public search, certified workers
Every figure above links to the source it was read from. This page was last changed on 10 October 2026. How we check this.