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Firms sustain growth from govt projects
Jakarta Post - August 3, 2016
Earlier this year, the government issued two legal bases to expedite 225 projects listed as "national strategic projects" and a mega power plant project.
They comprise 225 projects across 13 sectors such as railways and toll roads. The projects will receive special backing and attention from the government, as stipulated by presidential regulations.
The government is hoping to see the regulations ease transportation and the distribution of goods and create new jobs to spur economic growth.
Publicly listed diversified conglomerate Astra International (ASII), for example, has allocated Rp 14 trillion (US$1.07 billion) in its consolidated capital expenditure (capex) this year, with almost 40 percent set to finance projects in the infrastructure, logistics and property sectors.
Astra, which has started to focus on non-automotive businesses due to stagnant growth in its automotive segment, currently controls five toll road projects. However, only 72 kilometers of the Tangerang-Merak toll road in Banten is fully operational.
Other toll road projects are located across Java with a total length of 197 kilometers, including the Semarang-Solo toll road in Central Java and the Jombang-Mojokerto toll road in East Java.
"The ongoing projects are still being constructed or are in the middle of the land procurement process," president director Prijono Sugiarto said on Tuesday.
Another publicly listed construction company, Acset Indonusa, is also looking to tap into the growth potential from the government's infrastructure projects, especially in toll road projects.
Acset vice president director Jeffrey G. Chandrawijaya said on Tuesday the company was currently involved in a bidding process for the tender for "a government-run toll road project".
"If we win the tender, this would be our first project as a full contractor," Jeffrey told reporters at the Indonesian Stock Market (IDX) building in Central Jakarta.
Acset, which was established in 1995, focuses on structure and foundations. Acset saw its consolidated net profits soar by 70.9 percent yoy to Rp 943.7 billion during the first half of the year.
Apart from various transportation infrastructure projects, the government's mega electrification project, which aims to provide 35,000 megawatts (MW) in additional electricity capacity by 2019, has also given private enterprises the opportunity to both invest and expand.
Astra, for example, is currently building two power plants in Jepara, Central Java, which will need investment worth US$3.9 billion. These power plants will have a capacity of 2 x 1,000 MW of electricity.
The government's commitment to spend heavily on infrastructure over the next few years is also a blessing for players in supporting industries, like concrete and cement manufacturers.
Pre-cast concrete maker Wijaya Karya Beton's (Wika Beton) investor relations head, Yushadi, said in order to accommodate increasing demand, the firm was seeking 30 hectares of land in Subang, West Java, to build another factory worth Rp 250 billion with an annual capacity of around 300,000 tons of concrete.
The firm provides concrete to major public projects, including the 120 kilometer Makassar-Parepare railway line in South Sulawesi.
Pamudji Rahardjo, the president director of state-run cement maker Semen Baturaja, meanwhile, said major government projects had helped his firm sustain sales volumes during the economic downturn.
"Palembang is revamping its look with new roads and bridges as it prepares to co-host the upcoming 2018 Asian Games. This creates more sales for us," he said. (vps/mos)
Source: http://www.thejakartapost.com/news/2016/08/03/firms-sustain-growth-govt-projects.html.
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