How to win government contracts and tenders in Indonesia

Securing Government Contracts in Indonesia: A Strategic Guide Based on Trade Policies and Regulatory Requirements

Executive Summary

Indonesia's evolving procurement framework represents significant opportunities for companies prepared to navigate local regulations and international commitments. Firms must understand domestic procurement laws, adhere to international trade principles, fulfil stringent anti-corruption guidelines, adopt environmental sustainability standards, and leverage trade agreements to maximize competitive advantages.

Legal Framework Governing Public Procurement

Domestic Legislation

Indonesia's public procurement landscape is governed primarily by Law No. 12/2016 on public procurement and Law No. 13/2016 on concessions. These laws consolidated previously fragmented regulations into streamlined processes, managed centrally through the National Public Procurement Agency (LKPP). Procurement announcements and processes are overseen through the electronic procurement platform, known as LPSE, significantly reducing bureaucracy and enhancing transparency [2][9].

International Obligations

Despite holding observer status in the Government Procurement Agreement (GPA) at the WTO, Indonesia generally aligns its procurement practices with international principles such as non-discrimination, transparency, and competitive bidding processes. Their active stance in WTO disputes, such as the successful case against discriminatory EU palm oil measures, demonstrates Indonesia’s readiness to leverage international mechanisms to ensure fair treatment of trade partners [1][5].

Registration Requirements

Mandatory Vendor Credentials

Companies must register via Indonesia’s LPSE portal, providing the following documents:

• Legal incorporation certificate (Akta Pendirian Perusahaan)
• Tax Identification Number (NPWP)
• Audited financial statements certified by licensed auditors [9][14]

Upon successful registration, vendors receive a Public Procurement Organisation Number (PPON), which is required to participate in procurement activities.

Sector-Specific Licensing Requirements

Additional sector-specific licenses may be required. For example, mineral processing and infrastructure projects often mandate adherence to environmental, labour, and safety regulations as determined by relevant ministries such as the Ministry of Energy and Mineral Resources. Regulatory compliance is essential to prevent disqualification from tenders involving sensitive sectors [7].

Documentation Standards

Technical Proposals

Bidders must provide comprehensive proposals, frequently including:

• Clearly established methodologies and compliance with tender specifications
• Technical qualifications demonstrating past project expertise
• Relevant certifications and standards compliance documentation
• Evidence of sustainable and ethical business practices [12]

Financial Disclosures

Financial submissions typically require:

• Transparent, itemised pricing structures in centrally provided Excel templates (excluding excessive contingency budgets)
• Direct and indirect cost breakdowns conforming to the approved government Budget Implementation Documents (DIPA)
• Adherence to thresholds, deviations greater than 10% triggering audits and potential disqualification [9]

Compliance Considerations

Anti-Corruption Measures

Following high-profile bribery cases investigated internationally, Indonesia enforces strict anti-corruption standards. Companies are advised to maintain meticulous records and transparency in all engagements, adhering strictly to regulations influenced by international standards such as OECD's Base Erosion and Profit Shifting (BEPS) guidelines, codified in regulations like Finance Ministry Regulation PMK No. 192/PMK03/2018 [2].

Sustainability and ESG Requirements

Environmental and social governance criteria significantly impact tender evaluation processes, particularly in infrastructure and energy projects. Recent attention to sustainability violations has led to increased scrutiny, emphasising the importance of compliance with environmental standards outlined in Presidential Regulation No. 18/2020, covering Indonesia’s commitment to green industrial policies [7].

Leveraging International Agreements

Businesses should strategically use existing economic partnerships and trade agreements to bolster competitiveness:

• Canada-Indonesia Comprehensive Economic Partnership Agreement (CEPA): Provides preferential tariffs, market access, clear investment protections, and streamlined export processes [3].
• ASEAN Free Trade Area (AFTA) and Other Regional Agreements: ASEAN-related agreements offer duty exemptions and preferential access, significantly benefiting those operating within designated economic zones such as Batam and Surabaya [5].
• Investor-State Dispute Settlement Mechanisms (ISDS): Embedded in bilateral agreements, ISDS provisions offer arbitration options for resolving contractual and investment disputes, encouraging fair treatment and protection of foreign interests [3].

Conclusion

Successfully securing government contracts in Indonesia demands meticulous preparedness in understanding complex regulatory environments and aligning business practices accordingly. Companies that effectively integrate rigorous legal compliance, ethical standards, and strategic use of international trade agreements are positioned optimally within this dynamic market environment. As Indonesia continues to pursue transparency, digitalisation, and sustainability in its public procurement processes, well-informed partners will increasingly find lucrative opportunities.

[1] https://indonesiabusinesspost.com/3679/markets-and-finance/indonesia-wins-at-wto-eu-must-adjust-palm-oil-policy
[2] https://en.wikipedia.org/wiki/Government_procurement
[3] https://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/indonesia-indonesie/cepa-apeg/summary-negotiated-resume-negociations.aspx?lang=eng
[4] https://support.google.com/googleplay/android-developer/answer/15987130
[5] https://rtais.wto.org/UI/PublicSearchByMemberResult.aspx?MemberCode=360&lang=1
[6] http://www.franciscoblaha.info/blog
[7] https://www.lowyinstitute.org/publications/future-indonesia-s-green-industrial-policy
[8] https://www.cambridge.org/core/journals/oryx/article/designing-and-evaluating-alternative-livelihoods-for-shark-conservation-a-case-study-on-thresher-sharks-in-alor-island-indonesia/16522D89ADD2D9B2FB123155A9E7FC8A
[9] https://www.open-contracting.org/2025/02/20/6-steps-for-civic-monitors-to-identify-fraud-risks-in-procurement-in-indonesia/
[10] https://www.achilles.com/industry-insights/procurement-act-23-faqs/
[11] https://www.rti.org/sites/default/files/SAREP-RFP-2025-002-Revised.pdf
[12] https://www.who.int/indonesia/about-us/procurement-notice
[13] https://www.adb.org/documents/procurement-regulations-adb-borrowers
[14] https://www.biometricupdate.com/202502/indonesia-aims-to-boost-digital-id-uptake-in-bid-for-greater-efficiency
[15] https://en.wikipedia.org/wiki/Ministry_of_Trade_(Indonesia)