PT Surya Semesta Internusa Tbk (SSIA) is an Indonesian property developer. Over the last four decades, Surya Semesta Internusa has transformed from a private real estate developer into a public company with 8 operating subsidiaries, whose activities are grouped into three main categories i.e. property, construction and infrastructure, and hospitality. The company has a firm focus on industrial estates, resorts, hotels and offices but has recently also started to invest in toll roads.

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The Indonesia Investment Coordinating Board (BKPM) expects that investments in the second quarter of 2013 will grow by 25 percent to IDR 96.13 trillion (USD $9.6 billion) compared to Q2-2012. Although Indonesia's economic growth is under threat of slowing down to below an annual growth rate of six percent, the government agency still believes that total investments in 2013 can meet the target of IDR 390 trillion (USD $39 billion). Investments in Q1-2013 were recorded at IDR 93 trillion.

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Standard Chartered Bank expects economic growth in Indonesia in 2013 to remain robust at 6.2%. The bank believes this is a realistic assumption amid global economic uncertainty and higher subsidized fuel prices which limits people's purchasing power. The greatest pillar of support for Indonesia's GDP growth is domestic consumption, and which is supported by Indonesia's demographic composition as the country not only has a large population (over 240 million people), but also a young one (half of the population is below thirty years of age).

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Holcim Indonesia, the third largest cement producer in Indonesia, is a cement-based building materials and services provider with operations in two countries, Indonesia and Malaysia. The company currently holds a market share of around 15 to 16 percent in Indonesia in terms of cement production. Holcim and its subsidiaries have a combined cement production capacity of 9.1 million tons in Indonesia. The company, part of the Swiss-based Holcim Group, aims to expand production capacity with its two new Tuban plants.

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Express Transindo Utama (TAXI), an Indonesian taxi operator controlled by Peter Sondakh's Rajawali Corpora, received the award for 'Warta Ekonomi's Best New Listed Company'. Warta Ekonomi is one of Indonesia's renowned business and economic magazines. The taxi operator received the award because its business is experiencing good growth as can be seen from its stock performance. In 2013, its shares rose 72.94 percent. The company is the first, and only, taxi operator that went public on the Indonesia Stock Exchange (IDX).

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State-owned airline Merpati Nusantara Airlines will sell between 30 and 35 percent of its shares to domestic or foreign investors. The government feels the need to sell a stake as the airline has a debt of about IDR 6 trillion (USD $603 million). Most of this debt, about IDR 4 trillion, is held in Indonesia (government and state-owned enterprises). As such, the company is in need of new funds to restructure its business model. Last year, the airline carried 2.1 million passengers.

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Semen Indonesia, formerly known as Semen Gresik, is Indonesia's largest cement producer. The company, which is one of the few Indonesian companies that has spread its wings abroad for business expansion, forms the holding company of three large cement producers: Semen Gresik (East Java), Semen Padang (West Sumatra) and Semen Tonasa (South Sulawesi). Although the company lost a couple of percentage points in terms of market share, it still dominates Indonesia's lucrative cement industry.

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Cement sales in Indonesia between January and May 2013 rose 6.9 percent to 23 million tons (year on year). In the month May alone, cement sales rose by 2.1 percent (to 4.7 million tons), one of the lowest monthly growth rates seen in the last years. Between January and April 2013, cement consumption had still grown at a pace of 8.6 percent (YoY). These numbers thus seem to indicate that Indonesia's economic growth is slowing down as cement sales reveal the state and pace of infrastructure and real estate projects.

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Indonesia's government expects expenditure on subsidized fuels in 2014 to amount between IDR 190-220 trillion (USD $19.2 to 22.2 billion). A high official at Indonesia's Finance Ministry, Robert Pakpahan, said that the assumption is based on a subsidized fuel quota of 48 to 51 million kiloliters and an Indonesian crude oil price of USD $100-115 per barel. Despite having raised the price of subsidized gasoline by 44 percent last week, it means that both volume quota and total expenditure on fuel subsidies will rise in 2014.

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Perusahaan Gas Negara (PGN) is a government controlled gas firm that forms Indonesia's largest natural gas transportation and distribution company. It operates a distribution network that extends for 3,865 kilometers and a transmission pipeline network that measures 2,047 kilometers. PGN plays an important role in Indonesia's electricity production as it sells about 40 percent of its total sales volume to the country's power generation industry. It also forms one of the largest Indonesian companies in terms of market capitalization.

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State-controlled toll road constructor and operator Jasa Marga is expected to post rising revenue and net profit in the years to come as its toll road network is expanding amid the government's drive to push for infrastructure development, including toll road development. Recently Jasa Marga was awarded four toll road projects - all on the island of Java - with a total length of 262.3 kilometers (valued at IDR 18.4 trillion). Up to 2017 Jasa Marga plans to commission some 313 kilometers of toll road.

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After Japan was disappointed by not being awarded the contract to build a high-speed railway between Indonesia's capital city of Jakarta and Bandung (West Java), the Indonesian government now plans to offer the revitalization of the northern Java railway to Japan. Another project that is expected to be offered to Japan is the Patimban seaport project in Subang (West Java). Indonesian President Joko Widodo is currently in Japan for a two-day visit to attend the Group of Seven summit on invitation of Japanese Prime Minister Shinzo Abe.

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It is estimated that Indonesia will need some USD $450 billion in funds to finance the government's infrastructure development plans for the 2015-2019 period. However, through the state budgets the government can only deliver USD $230 billion, or roughly 50 percent of required funds. The remainder should originate from the private sector (30 percent of total funds) and state-controlled enterprises (20 percent). However, is it likely that the private sector (both foreign and domestic) is to come up with USD $141 billion for investment in infrastructure up to 2019?

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With the Indonesian government showing its commitment to push for infrastructure development, the property sector of Indonesia is expected to get a boost as infrastructure development opens access to new areas. For example, Indonesia's first high-speed train project that is to connect Jakarta and Bandung (in West Java) is expected to give rise to new economic centers and cities along the 142 kilometers-long railway. Moreover, existing property in the proximity of a new infrastructure project should lead to significantly rising property prices.

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The Indonesian government plans to offer 10 toll road projects - with a total length of 520.83 kilometers - to investors before the end of the year. The projects are estimated to have a total value of IDR 109.58 trillion (approx. USD $8.3 billion). The offering of these projects are in line with the government's efforts to boost infrastructure development across the country. Such development will enhance inter and intra island connectivity, thus curbing the nation's high logistics costs and offer a more attractive investment climate to (potential) investors.

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Two state-controlled companies (both listed on the Indonesia Stock Exchange) are expected to feel the positive impact of the light rail transit (LRT) in Palembang (South Sumatra), a transportation project currently under construction. These two companies are construction firm Waskita Karya and cement producer Semen Baturaja. These two companies are heavily involved in the LRT project that is estimated to cost around USD $520 million. This LRT track is supportive infrastructure for the 2018 Asian Games, to be held in South Sumatra in August 2018.

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Indonesia's economic growth in the first quarter of 2016 was rather disappointing at 4.92 percent (y/y), below analyst estimates that averaged around 5 percent (y/y), due to slowing household consumption, private investors being in a wait-and-see mode, and relatively weak government spending (a usual phenomenon at the year-start). Indonesia's construction sector also grew weakish in Q1-2016. However, the construction sector still has good prospects in the years ahead on the back of the government's infrastructure projects.

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If we look back on the month of April, two important matters - related to the economy - occurred in Indonesia this month: (1) in the first week of April, the Indonesian government managed to complete the Revised 2016 State Budget (RAPBN-P 2016), and, one week later, (2) the central bank (Bank Indonesia) announced it will adopt a new benchmark monetary tool per 19 August 2016 - the so-called seven-day reverse repurchase rate - that is to replace the existing BI rate (which fails to influence market liquidity effectively).

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Bank Negara Indonesia (BNI), one of the leading banks in Indonesia, is expected to maintain rising net profit figures in the years ahead due to its decision to focus on (corporate) credit disbursement for domestic infrastructure development projects. In fact, according to RHB OSK Securities, BNI may become the state-controlled bank that benefits most from the government decision to raise its infrastructure budget to IDR 313.5 trillion (approx. USD $24 billion) in the 2016 State Budget. Last year, growth of credit disbursed by BNI to infrastructure projects climbed 116.2 percent (y/y). This year infrastructure credit may grow by another 19 percent.

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Public spending on infrastructure development in Indonesia is not optimal. Sofyan Djalil, Indonesia's National Development Planning Minister as well as Head of the National Development Planning Agency (Bappenas), says immature and non-integrated planning between ministries and other government agencies as well as between the central and regional governments cause inefficient and non-optimal infrastructure spending. Non-optimal infrastructure development implies that Indonesia's overall economic growth as well as social development cannot achieve its full potential.

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