Govt submits bill on construction services to House

JAKARTA (JP): The government submitted on Monday the bill on construction services to the House of Representatives, which is expected to give more leverage to local construction firms.

Minister of Public Works Rachmadi B. Sumadhijo said on Monday the bill would provide legal clarity to the construction industry, which contributes about 65 percent of investment value to national development.

"The bill will empower our contractors to enable them to increase their competitiveness," Rachmadi said, after a meeting with House Commission IV for public works.

He submitted the bill earlier on Monday at the House's plenary session.

Chapters in the bill delineate the responsibilities of each party involved in a project when a construction fails. It stipulates which parties will be responsible if a building or a construction deteriorates within a period of 10 years, he said.

The current 1941 law on construction from the Dutch colonial government only provides a one-year period during which construction failures are guaranteed, he said.

Rachmadi said parties involved in projects would install an independent team to determine responsibility for faults in construction deterioration.

"If it is the contractor's fault, then a penalty will be imposed. The same thing applies to the project owners or management and the consultants."

A construction firm must also provide insurance to the project owner, he said.

Project management would be required to tender offers to choose construction companies under the proposed bill.

Rachmadi said the bill would be applied both to government and private sector projects.

He said he expected the bill to be passed by the House by the end of April.

"This bill is high on the government's list (of priorities)."

Commission IV member Burhanuddin Napitupulu hailed the proposed bill, saying it was long awaited by the construction industry.

"The bill, hopefully, will create a balance of power between project owners and construction companies."

Burhanuddin said many construction companies had weak bargaining positions because they employed many people and could not afford to lose projects.

Many construction companies are currently in dire straits because they had not received payments from project owners in months or years, he said.

"The bill should penalize the project owners too, for delaying payment to construction companies," he said, noting that construction companies currently face penalties when they do not finish jobs on schedule. (das)