Construction firms mull protection
Zakki P. Hakim, The Jakarta Post/Jimbaran, Bali
Local construction firms are seeking a certification system and other barriers to entry to regulate the industry amid tight competition and liberalization.
The National Construction Service Development Board (CSDB) conveyed its members' concerns during the two-day 11th AsiaConstruct Conference here on Friday.
"Ideally, there should be a balance between foreign and local construction service providers, be it the small or big players. But to achieve that, we need an adequate level of entry barriers to ensure fair competition," Hari G. Soeparto, the team leader of CSDB's Indonesian Construction Industry Development Team, said.
Hari said local firms were not against healthy competition, which would encourage creativity and innovation in the industry.
Vice President Jusuf Kalla, who opened the two-day event, said to improve their competitiveness, local players needed to improve efficiencies by lowering their prices, reducing delivery times, increasing capabilities and building synergies with others.
"I have been working in the construction sector for almost 30 years, so I know the business very well," said Kalla, who was a businessman before becoming the Vice President.
CSDB chairman Sulistijo Sidarto Muljo said the relatively stable macroeconomic conditions recently had led to an increase in construction activities. Local players were hopeful that the government's determination in prioritizing infrastructure projects across the country would boost the sector further, Sulistijo said.
CSDB vice chairman Suntana S. Djatmika said governments in the region could not hide from their commitments to liberalize the sector, and standardization in the industry could, in fact, lift barriers between nations.
Requirements of certification and proof of registration could also be applied here, Suntana said.
"Malaysia has done that. Users would require construction firms to show certain certificates provided by their trade associations.
"We will do that too, through our CSDB," he said.
The value of construction work done in the 2004 financial year had increased by 7 percent from the previous year. As the Asian monetary crises hit the country, non-residential building fell in 1999 to Rp 3.9 trillion from Rp 6.7 trillion in the previous year, before steadily climbing to Rp 5.7 trillion in 2004. Residential and non-residential building activity fell in 1999, but by 2004 it had recovered to be worth an estimated Rp 7.4 trillion.
Expenditure on roads, bridges, railway, airports, ports and bus terminals, meanwhile, grew from Rp 4.1 trillion in 1998 to Rp 9.8 trillion in 2004.
The annual AsiaConstruct Conference, which was first held in Japan in 1993, now hosts industry players from Australia, Bhutan, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Sri Lanka, Thailand and Vietnam.