Cement hike hits small contractors
JAKARTA (JP): Recent hikes in cement prices, excessive supervision and out-of-date cost estimates for state-funded projects have brought great losses to small-scale construction contractors.
The National Contractors Association (Gapensi), which groups mostly small-scale builders, complained to the House of Representatives yesterday that its members suffered the most from the recent hikes in cement prices, which in some areas reached prices over 100 percent higher than the government-set local price references.
"We bear the most losses because we, unlike large contractors, cannot buy cement directly from the main distributors or even producers," Gapensi's chairman, Agus Kartasasmita, said in a hearing with the House's Commission V here.
Agus said that excessive government supervision of development projects has also raised costs.
He explained that there are more and more related government institutions involved in the supervision of projects funded by state or local administrations.
The institutions include the Supreme Audit Agency (BPK), the Government Audit Agency (BPKP), the Inspectorate General of the Ministry of Public Works, the ministry's Provincial Inspectorate and local Agencies for the Coordination of Support for the Development of National Stability (Bakorstanasda).
"The involvement of all these institutions in the supervision of projects, of course, burdens contractors because of the extra expenses added for the contractors," Agus said.
He also noted that the cost estimates for projects funded by government institutions are often out of date because they have been calculated by project managers based on the government's list of development projects, which may have been processed two or three years earlier.
"As the cost estimates are not appropriate, contractors are forced into unhealthy competition with each other by cutting bidding prices to win jobs," Agus said.
He then called on the government to update its list of projects and to make their costs more realistic. (rid)