Waskita Karya Shares Down after Gov't Halts Elevated Construction Projects
Shares of listed construction company Waskita Karya are under pressure on Wednesday (21/02) after the Indonesian government decided to temporary halt all elevated construction projects that involve girder installations (which include projects such as flyover toll roads, bridge construction, and the light rail transit, or LRT).
The decision, coming from Indonesia's Public Works and Housing Minister Basuki Hadimuljono, was made after a series of construction accidents, the latest occurring on Tuesday (20/02) when a concrete mold at one of Waskita Karya's toll road projects in Jakarta collapsed, injuring seven workers.
The Indonesian government is aggressively pushing for much-needed infrastructure development across the country in order to boost economic and social development. However, Indonesia is also known for bad work habits, including the lack of skilled engineers and workers, while it is also common for local construction companies to save money by selecting construction materials that lack in terms of quality or quantity. Another issue is that when conducting tenders for construction projects the central government tends to select those contractors that make the lowest bid, hence are more affordable. Lastly, there exists a lack of proper planning and supervision in these projects.
Since August 2017 there have occurred 14 accidents in government-led infrastructure projects in Indonesia, several of which have been fatal. Construction company Waskita Karya was involved in seven of these accidents and therefore Indonesia's Ministry of Housing and Public Works had already warned the company earlier this month, urging Waskita Karya to improve its operating procedures and supervision methods.
Meanwhile, the Indonesian Consumer Protection Foundation (YLKI) urges the government to create a special audit team to examine and monitor all ongoing projects in an attempt to prevent future accidents that put the lives of Indonesian consumers in jeopardy.
Shares of Waskita Karya were down 3.28 percent to IDR 2,950 a piece in the first trading session on Wednesday (21/02). Meanwhile, shares of its subsidiary Waskita Beton Precast fell 1.26 percent to IDR 470.