On 30 April 2025, the President promulgated Presidential Regulation No. 46 of 2025 on the Second Amendment to Presidential Regulation No. 16 of 2018 on Government Procurement of Goods/Services (“Perpres 46/2025”). Its stated aims are to increase the use of domestic products, to speed up government procurement, and to regulate village procurement. It took effect on the date of promulgation.

Perpres 46/2025 amends Perpres 16/2018, and the consolidated text now combines Perpres 16/2018, Presidential Regulation No. 12 of 2021 and Perpres 46/2025 in one document. For providers of construction works to ministries, agencies and regional governments, four changes matter most: the direct procurement thresholds, the competency requirement for the Commitment Making Officer (Pejabat Pembuat Komitmen or “PPK”), the rules on contract amendments, and the preference for domestic products and small businesses.

Direct Procurement Thresholds

Direct Procurement is a selection method that does not require a tender. Perpres 46/2025 sets separate ceilings for each category of procurement.

1. Goods and Other Services (Jasa Lainnya): up to Rp200 million.
2. Construction Works (Pekerjaan Konstruksi): up to Rp400 million.
3. Consultancy Services (Jasa Konsultansi): up to Rp100 million.

Direct procurement should not be confused with direct appointment (penunjukan langsung), which is available only in specified circumstances, for example where a project implements a Presidential directive or where only one capable business can supply the work. The form of contract follows the value. A work order (surat perintah kerja) is used for construction works up to Rp400 million, and a formal agreement (surat perjanjian) above that. Direct procurement above Rp50 million must be run through the Indonesian Government Procurement (Sistem Pengadaan Secara Elektronik or “SPSE”) with transactional features.

Competency Certificate for the PPK

PPK is the official delegated by the Budget User (Pengguna Anggaran or “PA”) or Proxy Budget User (Kuasa Pengguna Anggaran) to take decisions that commit government spending, including setting the Owner's Estimate (Harga Perkiraan Sendiri), preparing the draft contract and controlling its performance. Perpres 46/2025 now requires each PPK to hold a PPK competency certificate appropriate to its typology.

Contract Amendments, Emergencies and Force Majeure

Where site conditions differ from the drawings or technical specifications in the contract, the PPK and the provider may amend the contract. The amendment may change quantities, add or remove activities, adjust technical specifications or change the schedule. If it increases the contract value, the final contract value may not exceed the original contract price by more than 10%.

Perpres 46/2025 adds an exception. Where the amendment is caused by an emergency (keadaan darurat), the increase may exceed 10% with the approval of the PA. The Perpres treats emergencies as including natural, non-natural and social disasters, and damage to infrastructure that can disrupt public services.

Force Majeure (Keadaan Kahar) is dealt with separately. Performance of the contract may be suspended, the parties may amend the contract if performance continues, and an extension of time may run beyond the budget year. Follow-up steps after a force majeure event are left to the contract itself.

Domestic Products and Small Business Preference

Perpres 46/2025 strengthens the preference for domestic content and small business participation, and the obligations run through planning, selection and performance.

1. Ministries, agencies, regional governments and other institutions must allocate at least 40% of their goods/services budget to domestic products of UMK and cooperatives. The PPK must apply the same minimum when packaging procurement.
2. Procurement packages of goods, construction works or other services with a budget ceiling (pagu anggaran) of up to Rp15 billion are reserved for UMK and cooperatives, except for packages that require technical capability they cannot meet.
3. A provider that is not a UMK or cooperative must cooperate with capable UMK or cooperatives through a partnership, subcontract or other arrangement, and the arrangement must be stated in the selection documents (Dokumen Pemilihan).

Domestic content also carries into performance. Where a contract needs materials, supplies or equipment, the provider must use domestic products and/or UMK and cooperative products, as stated in its bid. For construction tenders, a price preference of up to 25% may be given for a commitment to meet the minimum domestic component level (Tingkat Komponen Dalam Negeri or “TKDN”) on the goods component. The minimum TKDN for construction services is to be set by the minister responsible for construction services in coordination with the minister responsible for industry.

Other Changes Affecting Construction Contracts

Perpres 46/2025 adds a modified turnkey contract (kontrak modifikasi putar kunci), which carries a fixed and definite price until the works are complete, and a performance-based contract (kontrak berbasis kinerja), which is tied to achieving a defined level of service. It also allows the project owner to supply resources for construction works, such as standardised materials and equipment, sourced through e-purchasing or an umbrella contract (supplied by owner).

Price adjustment is available only in narrow circumstances. It applies to multi-year contracts in unit price or time-based form, with a performance period of more than 18 months, starting from the thirteenth month, and only if the method of calculation is set out in the selection documents. It does not apply to profit or overhead, and components sourced from abroad use the price index of the country of origin.

Transitional Position

Contracts signed under Perpres 16/2018, as amended by Presidential Regulation No. 12 of 2021, remain valid until the contract ends. Procurement whose preparation and execution began before Perpres 46/2025 took effect may be continued under the new Perpres. LKPP has also stated that existing implementing regulations remain in force to the extent that they do not conflict with Perpres 46/2025 and have not yet been replaced.

Points Still to Be Clarified

The Perpres 46/2025 requires PPK certification but does not regulates the implication of non-certification. Because the PPK signs the contract for the government, the effect on the validity of a contract signed by an uncertified PPK is not addressed, and the joint implementing regulation should be checked. The provisions on the 40% allocation likewise do not state how a shortfall is to be treated.

The price adjustment provision gives no express route for lump-sum contracts. The Minister of Public Works stated on 27 September 2026 that the government is waiting for LKPP to prepare a circular or institutional regulation on price escalation, and its form and timing have not been confirmed. Providers under lump-sum contracts should therefore expect to rely on their contract clauses.