Govt submits bill on construction services to House

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)