Client COVID-19 INSIGHTS CENTER/ Newsflash

Handling COVID-19 Outbreak in Construction Services Sector

On March 27, 2020, the Minister of Public Works and Housing (“MOPWH”) issued the MOPWH Instruction No. 02/IN/M/2020 on Protocol of Prevention of the Corona Virus Disease 2019 (COVID-19) Outbreak in Construction Service Works (the “MOPWH Instruction”). This MOPWH Instruction serves as a follow up to President Joko Widodo’s direction on March 15, 2020 related to the mitigation efforts and determination of COVID-19 as an Extraordinary Event (Kejadian Luar Biasa or “KLB”) by the Minister of Health.

The MOPWH Instruction mainly revolves around the question on the continuity of construction work. The MOPWH Instruction stipulates that construction works may be suspended due to force majeure only if:

    • it is considered high-risk due to its location being near the epicenter of the outbreak,
    • there has been a confirmed case of COVID-19 and/or a worker having the status as patient under surveillance (Pasien Dalam Pengawasan or “PDP”) for COVID-19, or
    • there has been a regulation from the local or central government suspending the construction work due to force majeure.

However, if construction work is deemed crucial to continue due to its nature and urgency in handling social and economic impacts from COVID-19, such work may continue if:

    • it obtains an approval from the MOPWH,
    • it implements the protocol of COVID-19 prevention with high discipline and submits a periodical report to the COVID-19 Prevention Task Force, and
    • it must suspend its operation if a worker is found to be infected with COVID-19 or become a PDP.

Further, the MOPWH Instruction stipulates key policies as follows:

  • The Scheme for Protocol on Prevention of COVID-19 in Construction Service Works

Based on the MOPWH Instruction, the following points are the protocol scheme that must be conducted during construction work:

    • the establishment of a COVID-19 Prevention Task Force;
    • the identification of potential risks of COVID-19 in the field;
    • the provision of health facilities in the field; and
    • the implementation of COVID-19 prevention in the field. For ease of reference, below is the protocol mechanism on prevention of COVID-19 outbreak for construction services:

 

  • The Actions to Take for Suspended Contracts

The MOPWH Instruction provides that in the event a construction contract is suspended due to force majeure, the following conditions shall apply:

  1. Establishing the mechanism for work suspension;
  2. Establishing the mechanism for changes in contract specifications; and
  3. Compensation in the form of fulfilling (i) the payroll of the construction workers during the suspension period, and (ii) the payment obligation to sub-contractor, producer, and supplier during the suspension period. This requirement is in line with the Minister of Manpower Circular Letter No. M/3/HK.04/III/2020 dated March 17, 2020 on the Employee Protection and Business Sustainability on the Prevention of COVID-19 (the “Circular Letter”) which emphasizes that workers/employees are still entitled to receive their payroll during the COVID-19 outbreak situation.

The MOPWH Instruction further provides that if a construction contract needs to continue due the work’s nature and urgency, the implementation of COVID-19 prevention in the field can be proposed as part of an additional cost for the implementation of Construction Safety Management System (Sistem Manajemen Keselamatan Konstruksi or “SMKK”) through an addendum of the construction contract.

  • The Protocol on Prevention of COVID-19 for Goods/Services Procurement in Construction Services

For goods/services procurement in construction services, the MOPWH Instruction further provides for ease and expansion access through both online and offline procurement process. This provision is intended to minimize the risk of spreading the virus by taking into account requirements on goods/services procurement in the construction services sector.

We note that while the MOPWH Instruction is indeed issued during the COVID-19 outbreak in Indonesia, this instruction also enables the implementation of construction services to run more effectively and efficiently even after the pandemic period has passed. Overall, this MOPWH Instruction addresses the concern on performing construction work during COVID-19 outbreak so that this issue will not interfere with the infrastructure development in Indonesia.

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April 23, 2020

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