Infrastructure Projects Could Drive Construction Market to Rp 400 Trillion | The Jakarta Globe
(The Insider Stories) — Indonesia’s construction market is predicted to reach Rp 400 trillion ($41 billion) this year or grow 20% compare to last year IDR330 trillion, a contractor association (AKI) chief said.
Sudarto, head of AKI said, the domestic construction market has big potential. “Since two years ago, the construction sector contributed 8 percent to the 2011 gross domestic product and 10 percent of GDP in 2012, and for this year it is predicted to take up to 11 to 12 percent,” Sudarto said.
State and regional budgets as well as government-owned enterprises and the private sector contribute to the construction market.
He said the government’s commitment to infrastructure development appeared in the 2013 State Budget, which allocated 11.76 percent of the total IDR1,657.9 trillion budget for infrastructure.
Indonesia’s infrastructure lags behind that of many other nations. According to the World Bank’s Logistics Performance Index for 2012, Indonesia ranked 59 out of 155 countries assessed. The index reflects the perceptions of global freight forwarders doing business with Indonesia.
Indonesia has improved its performance since 2010, when its rank was 75, but the Performance Index for 2012 showed the country behind neighbors Singapore, Malaysia, the Philippines, Vietnam and Thailand. It also falls short of China, India, Taiwan and South Korea.
President Susilo Bambang Yudhoyono has sought to accelerate projects focused on revitalizing services and developing new infrastructure. Last year, Yudhoyono inaugurated eight projects, all part of the Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development (MP3EI), with a total investment value of $15.8 billion.
They include a floating storage and regasification unit in West Java; enhanced oil recovery projects from Pertamina EP, Pertamina Hulu Energi and Pertamina EP Cepu; and gas processing plants in Sungai Kenawang and Pulau Gading.
MP3EI is a 15-year, IDR4,000 trillion infrastructure blueprint.
