The construction market will have to continue relying on the government’s ambitious effort to boost the country’s infrastructure next y...
The construction market will have to continue relying on the
government’s ambitious effort to boost the country’s infrastructure next
year as the commercial property market will remain dim.
According to research from BCI Economics, the analysis and
forecasting arm of BCI Asia Pty Ltd., the total construction for civil
works, including infrastructure projects and utilities, is expected to
rise by 7.69 percent next year to Rp 250.1 trillion (US$19.16 billion).
BCI has identified power plant projects as the highest contributor to
infrastructure and utilities. The projects include the mega power plant
in Batang, Central Java, with a capacity of 2 x 1,000 megawatts.
Massive toll road projects will also play a key role in the
infrastructure and utilities sector, as the government aims to build
1,000 kilometers of new toll roads before 2019.
The Public Works and Public Housing Ministry — the ministry with the
largest infrastructure projects — has stated that it is looking to
connect the Trans Java toll road with Surabaya, East Java, in 2018.
However, the commercial building sector will continue declining, with
an expected drop of 9.25 percent to Rp 173.1 trillion in 2017, falling
further from a rate of 14.4 percent this year.
d, but people are choosing to wait and see,” BCI Asia
country manager Agus Dinar said on Thursday, pointing out the current
unfavorable macroeconomic situation.
Many developers choose to pause expansion plans amid economic
slowdown. Ballooning expenses have also put pressure on most property
developers, the report reads.
Agus further specified that the problem also lies within the
oversupply in several sectors, including in the office building sector,
which was exacerbated by weak demand and low purchasing power.
BCI has noted that even in the big city center office complexes, such
as the Sudirman Central Business District in Jakarta, the occupancy
rate is as low as 53 percent.
The research also shows the retail sector may see the steepest plunge
next year. Several retailers have closed stores, such as publicly
listed Mitra Adi Perkasa (MAP), which has already closed 207 stores this
year.
The move improved MAP’s efficiency and led its net profit to jump
more than four times to Rp 120.29 billion between January and September,
whereas its bottom line suffered from an 80 percent plunge during the
same period last year.
“Retailers are choosing to decrease their number of stores with the
slowing economy,” BCI Asia research manager Cahyono Siswanto said.
Overall, BCI predicts that the total construction project market —
including civil works, commercial buildings along with other projects —
will remain flat next year with a total of Rp 423.2 trillion worth of
projects.
Indonesian Construction Association secretary general Zali Yahya said
research findings reflected current conditions, where oversupply and
weak demand have plagued the market. “Many of our members have decided
to expand their businesses in infrastructure, both state enterprises and
private firms,” he said.
Source:The Jakarta Post
