Construction firms mull protection, liberalization

Construction firms mull protection, liberalization

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.