Dentons HPRP: Key takeaways of bonds and guarantees in Indonesian construction projects

(February 16, 2026)--Indonesia’s construction sector continues to expand alongside the country’s position as a key investment destination in Southeast Asia. Large-scale projects—ranging from smelters and EV battery plants to hotels and data centers—require robust financial safeguards to manage performance and payment risks. In this context, bonds and guarantees play a central role in securing project completion and protecting the interests of project owners and investors.

In this article, Abraham Silvester Harryandi (Partner), Frederick Dominic Sebastian (Associate), and Gabriela Zevanya Hartanto (Associate) examine the legal framework governing bonds and guarantees in Indonesia, including their basis under the Indonesian Civil Code, their application in government procurement under PR 12/2021, and their treatment under FIDIC standard forms. The authors also outline the key distinctions between bank guarantees and surety bonds, common structures used in practice, and practical issues frequently encountered by foreign investors—particularly in cross-border enforcement.

Understanding how these instruments are structured, triggered, and enforced is essential to minimizing disputes and safeguarding project value. This article provides a clear overview of the key considerations and common pitfalls, offering practical guidance for stakeholders involved in Indonesian construction projects. We invite you to explore the full discussion and reach out to our team should you require tailored advice.

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Abraham Sylvester Harryandi, Partner, Jakarta

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