What is the meaning of Simas Surety Bond

SURETY BOND is a two-party agreement between Insurance (Surety) and contractor (Principal), where the first party (surety) provides a guarantee to the second party (Principal) for the benefit of a third party (Obligee / Owner) that if the Principal is Default or due to something things that are negligent or fail to carry out their obligations in accordance with the agreement with Obligee, then Surety will be responsible for the Obligee to settle the Principal obligations.

The Surety Bond business in Indonesia has only been introduced since 1980 on government policy with the aim of helping weak economic entrepreneurs to participate in development, especially in projects funded by APBD / APBN and foreign aid. In its implementation, the government stipulates granting permits to Non-Bank Financial Institutions to issue guarantees in the form of Surety Bond as an alternative to Bank Guarantee issued by the Bank.

Next we submit, a brief explanation of the definition and types of Surety Bond, as well as our offer:

TYPES OF SURETY BOND

1. GUARANTEE OF BID BOND

The guarantee given to the Obligee that the Principal Holder of the Bid Bond has fulfilled the requirements determined by the Obligee to participate in the auction and if the Principal wins the auction, it will be able to close the contract of execution of the work with Obligee. If not, the Surety Company will pay the loss to Obligee for the difference between the lowest Principal offer and the next lowest Principal, the maximum amount of the guarantee.
The amount of the Guarantee Value is in the range of 1% - 3% of the Project Value.

2. PERFORMANCE GUARANTEE (PERFORMANCE BOND)

The guarantee given to Obligee that the Principal will be able to complete the work given by Obligee in accordance with the provisions agreed in the work contract. If the Principal does not carry out its obligations in accordance with the contract, the Surety Company will provide compensation to the Bondee for a maximum amount of the collateral value.
The amount of guarantee value for implementation ranges from 5% - 10% of the Project Value

3. ADVANCE PAYMENT BOND

The guarantee given to the Obligee that the Principal will be able to return the down payment that has been received from Obligee in accordance with the terms agreed in the contract, with a view to facilitating the financing of the Project.
The amount of collateral guarantee value ranges from 10% - 20% of the Project Value

4. MAINTENANCE BOND GUARANTEE

Maintenance Guarantee is a guarantee that is required when the physical project has been completed 100%. Maintenance guarantee is another form of contractor guarantee that if there are physical damages to the project during the maintenance period, the contractor concerned is obliged to repair it again.
The value of the guarantee deposit is between 5% of the project value

Provide several documents between others:

1. Fill in the Letter of Application for Issuance of Guarantees (SPPJ)
2. Company Deed & Amendment Deed
3. Company Profle along with Business Permit
4. Financial Statements for the last 3 (three) years that have been audited
5. Current Account Statement (Newspaper account used for project transactions) for the last 3 (three) months
6. Copy of Tender Invitation (for Tender Guarantee applicants)
7. Copy of Tender Winner appointment letter and Work Order or Contract Letter (for Applicant for Implementation Guarantee)
8. Copy of Contractor or Contract Agreement (for applicants for Advance Guarantee)
9. Copy of Handover News 1 (for Maintenance Guarantee applicants)
10. Letter of Compensation Agreement that has been signed and authorized before a Notary