14 June 2022 (closed)
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Below is a list with tagged columns and company profiles.
Today's Headlines Infrastructure
On Monday (08.11.2021) Indonesia Investments released its October 2021 report. This report discusses a range of subjects - related to political developments, the economy and social matters - that were influential in Indonesia in the month of October 2021.
On 8 June 2021 Indonesian Minister of State-Owned Enterprises Erick Thohir told Commission VI of the House of Representatives (DPR) that he proposes to raise the budget for capital injections into state-owned enterprises (SOEs) in 2022. The main reason is that the SOE Ministry wants to inject (additional) capital into 12 SOEs.
In November 2020 the Patimban seaport is expected to open in Subang (West Java). Although it is only the soft launch of the project’s first phase, it is no small matter as this port is set to be developed into Indonesia’s biggest port by 2027.
On Monday (05/10/2020) Indonesia Investments released the September 2020 edition of its monthly report. In this edition, titled 'Infrastructure in Focus', we focus on infrastructure development in Indonesia. For example we discuss how the lack of infrastructure development undermines economic and social development.
On Sunday 14 July 2019 Indonesian President Joko Widodo unveiled his vision for Indonesia in the 2019-2024 period, which will be his second – and final - term as president of Southeast Asia’s largest economy (with the inauguration of his new cabinet scheduled for late-October 2019).
In line with our forecast, Indonesia’s economic growth continued to accelerate in 2018. Based on data from Statistics Indonesia (Badan Pusat Statistik, or BPS), which were released in early February 2019, the country’s gross domestic product (GDP) expanded 5.17 percent year-on-year (y/y) in full-year 2018, up from a growth rate of 5.07 percent in the preceding year.
The construction of three national strategic projects - worth a combined IDR 70 trillion (approx. USD $5 billion) - is targeted to be completed before the end of 2019. These three projects are: (1) the first phase of Jakarta's mass rapid transit (IDR 16 trillion), (2) the New Yogyakarta International airport (IDR 10.8 trillion), and (3) the Patimban seaport in Subang, West Java (IDR 43.2 trillion).
Basuki Hadimuljono, Indonesian Minister of Public Works and Public Housing, said the government continues to push for infrastructure development in the form of toll roads in various regions across Indonesia.
The central bank of Indonesia (Bank Indonesia) believes that the Indonesian government needs to make a more careful selection in terms of infrastructure development projects in order to curtail the big amount of imports that put pressure on the country's current account balance and rupiah exchange rate.
Indonesia managed to rise sharply in the ranks of the World Bank's latest Logistics Performance Index (LPI). In the 2018 edition, which was released on Tuesday (24/07), Indonesia ranked 46th, up from 63rd in the preceding edition (released in 2016).
Latest Columns Infrastructure
From Hamburg (Germany) where he visited the G-20 summit, Indonesian President Joko Widodo instructed his cabinet to increase efforts to attract investment into Indonesia. Now Indonesia recently obtained the investment grade status from all important global credit rating agencies, it should make Indonesia a more attractive investment destination for foreigners, including institutional investors such as pension funds.
Angkasa Pura I, the state-owned firm that provides airport management services in the central and eastern region of Indonesia, offers foreign and domestic private investors the opportunity to operate and develop several airports (in cooperation with Angkasa Pura I) across Indonesia: the Sultan Aji Muhammad Sulaiman Airport in Sepinggan (Balikpapan, Kalimantan), Lombok Praya Airport on Lombok, and - in the pipeline - Kulon Progo Airport in Yogyakarta (Java).
Six new 'special economic zones' (in Indonesian: kawasan ekonomi khusus, or KEK) should become operational in Indonesia soon. These six KEKs are: (1) Bitung, (2) Palu, (3) Tanjung Api-Api, (4) Mandalika, (5) Morotai, and (6) Maloy Batuta Trans Kalimantan. Indonesia's special economic zones are designated areas that offer both foreign and local investors preferential regulatory and tax regimes, as well as - in theory - the availability of key physical infrastructure such as harbors and power plants that should attract foreign investment in these zones.
For Indonesian cement producers it is vital to maintain their market share amid ongoing difficult times. With Indonesia's total installed annual cement production capacity now being around 100 million tons, while domestic demand is only expected to reach 65 million in 2017, cement players are facing weak prices amid a big oversupply, while foreign demand for Indonesian cement is yet to grow. Meanwhile, due to the arrival of various new cement players in Indonesia in recent years, competition for market share has become increasingly fierce.
The controversial Batang power plant in Central Java is expected to be completed in 2020 now all land acquisition disputes have been resolved. This USD $4.2 billion power plant experienced a long delay as about a dozen of local farmers were reluctant to sell their land to the developers of the project. In February 2016 Indonesia's Supreme Court ruled in favor of the project developers. Indonesian President Joko Widodo is a supporter of this project.
Approaching the end of 2016 it is interesting to take a look whether the Indonesian government achieved its target in terms of infrastructure development. In this column we zoom in on toll road construction. Before 2016 started the central government - under the leadership of President Joko Widodo - targeted to see the construction of 136 kilometers of new toll roads this year. However, two weeks before the end of 2016 only 44 kilometers of new toll roads have been developed this year, achieving only 32 percent of the target.
Infrastructure is the artery of the economy. Blocked arteries are life threatening. Similarly, when there is a lack of adequate infrastructure within the economy (whether in terms of quality or quantity) the economy will run in a highly inefficient manner due to high logistics costs, uncompetitive businesses (as the costs of doing business rise significantly), as well as social injustice when, for example, it is difficult for part of the population to reach healthcare facilities, or, for children to reach a school.
Labuan Bajo, a small harbor town on the island of Flores in Indonesia's Nusa Tenggara region, is considered the "new Bali" due to its huge tourism potential. Blessed with beautiful and idyllic natural scenery (including beaches and offshore islands), foreign and domestic tourists will surely have a great experience. Although there are already about a dozen of high-class hotels (4 or 5 stars) and it is fairly well connected to other parts of Indonesia (through its Komodo Airport and port), the small fishing town remains underdeveloped for now.
Construction companies in Indonesia are expected to grow strongly, supported by the availability of many new construction contracts, in the second half of 2016. Particularly state-controlled construction firms are expected to benefit from the government's push for infrastructure development. The central government's budget for infrastructure development has risen significantly in recent years (see table below), while the government also tries to direct part of the funds that are generated through the tax amnesty program toward infrastructure development.
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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