LPJKN proposed six actions to deal foreign currency fluctuations

The National Construction Services Development Institute (Lembaga Pengembangan Jasa Konstruksi Nasional / LPJKN)  proposed six actions to the government to deal with foreign currency fluctuations. 

1. The government must establish the conditions of force majeure and revise the contract value by time duration, which is a multiyear, single year, and lump-sum contract.
2. The contract price adjustment can only be done in times of crisis.
3. Project delays can only be allowed if the agreement price adjustment has not happened.
4. The contractor is allowed to cancel the contract without penalty if the contract value is not agreed upon negotiation.
5. Review of final taxation for the period of crisis.
6. Incentives import tax on building materials strategic to national development.

As a plant, the proposal will be submitted to the government next week .

The Association also stated that minimum wage (UMR and UMP) rising, increase in fuel price and IDR-USD volatility has a negative pressure on the construction industry. According to LPJKN, the supplier of goods is not willing to lock the sale price more than a week since the price fluctuating.

Analyst believe that the proposal would be a boost to the owner of the project contractor. If the government approve the proposal, the margin of contractors will be affected by the light conditions of crisis.

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