Anggi M. Lubis, Jakarta – Despite expectations earlier this year that the country's construction industry would flourish alongside the government's higher infrastructure budget, some construction companies are closing the year with lower than expected results in meeting their initial contract targets.
State-run construction firm Waskita Karya was among the few that managed to close up the big gap between their targets and their actual contract achievement, just days before the calendar rolled over.
Waskita corporate secretary Hadi Susilo said his company was optimistic that it would pocket Rp 30 trillion, or around 32 percent above its target of Rp 22.7 trillion. Waskita, as previously reported, has countered the overall trend in the construction sector, rising above its peers mostly thanks to robust toll road projects.
Meanwhile, state-run construction company Pembangunan Perumahan (PP) corporate secretary Agus Samuel Kana said his company secured Rp 21.07 trillion by the end of November, a far cry from its full year target of Rp 27 trillion.
"This has not been an easy year for the construction business. There were challenges that led to delays in project tenders. Our business has been supported by, among other things, our subsidiary, PP Properti," Agus said, referring to his company's property subsidiary that went public earlier this year. He said that the subsidiary had contributed around 20 percent to the company's new contracts.
However, Agus noted that business progressed well in December and his company was currently waiting for the results from some tenders that would be out in few days and which would be able to help the publicly-listed firm gather in the remaining Rp 6 trillion.
Wijaya Karya (Wika), on the other hand, did not manage to pocket more than 80 percent of its initial target, with corporate secretary Suradi saying that the construction firm might only wrap up the year with Rp 25 trillion in new contracts.
The company initially hoped to pocket Rp 31.64 trillion in new contracts in 2015 and Suradi cited the economic slowdown and project delays as the factors that had affected the target results.
Adhi Karya corporate secretary Ki Syahgolang Permata said he could not yet disclose his company's estimation for the year's target. By November, however, the company pocketed only Rp 11.1 trillion, or around 59 percent of its full-year target of Rp 18.7 trillion.
The construction sector has been in the spotlight of late after the Public Works and Public Housing Ministry, responsible for some of the most important infrastructure projects touted by President Joko "Jokowi" Widodo's administration, was allocated Rp 119.84 trillion in the 2015 state budget.
The government has pledged to provide 35,000 megawatts in power through state-run construction firm PLN and independent power producers (IPP). The government has also pledged to connect toll roads in Java and Sumatera and build dams and other utilities nationwide.
The ministry, however, spent just 87.23 percent of its budget as of Dec. 22, still 6 percent short of its initial spending target of 93 percent by the end of the year.Despite the failure of many construction companies to meet their targets, construction think tank BCI Asia country manager Agus Dinar said that the country's construction sector was not facing an industry slowdown.
In fact, he argued that contract realization throughout the year showed significant growth compared to last year, mostly driven by a notable increase in infrastructure work propelled by robust IPP projects.
Data provided by BCI Asia showed that the total value of Indonesia's construction projects was expected to reach around Rp 402 trillion in 2015, an increase of 28.47 percent compared with 2014.
While most construction subsectors grew by double-digit rates this year, BCI's Agus highlighted the outstanding growth recorded in utilities – rising 81 percent year-on-year. He said that this substantial increase was powered by rampant power plant projects across the country. "Actually, this year went quite well for the construction sector," he said.
"Construction companies might have had difficulties in achieving their targets, but we have to remember that targets always go up each and every year. What we have to see is how the realization is, whether they are able to book higher records compared to the previous year."