Construction sector forecasted to shrink one percent next year

JAKARTA (JP): The country's construction sector will shrink 1 percent next year amid signs of economic recovery, compared to an estimated contraction of 5 percent this year, a property analyst said on Thursday.

PT BCI Asia said in a statement the construction market would show "an improvement trend" next year despite the continued negative growth.

It said the country's construction sector shrunk 40 percent last year at the peak of the economic crisis after recording growth of 12.9 percent and 12.8 percent in 1995 and 1996 respectively.

When the crisis started in 1997, the country's construction sector recorded 6.4 percent growth.

In the property sector, BCI Asia projected the investment for new projects would reach Rp 4.7 trillion next year.

The construction plan in the property sector next year includes 61 retail projects with a total investment of Rp 1.056 trillion, 55 residential projects with a total investment of Rp 500 billion, nine recreational projects worth Rp 412 billion, 39 office centers worth Rp 868 billion and 17 hotel/resort projects valued at Rp 487 billion.

Also planned are 39 school projects worth Rp 838 billion and 10 hospitals valued at Rp 176 billion next year, the company said.

It said investment in the property sector was estimated at Rp 6.5 trillion this year, equal to last year's investment,

The company also said foreign investors were returning to the country, particularly into the industrial sector, amid early signs of economic recovery.

An estimated 100 industrial projects worth a total of Rp 5.5 trillion would be developed next year nationwide, it said.

"Aside from the property sector, the industrial sector will also fare well next year."

It also noted potential improvement in the infrastructure sector next year.

It said there were 256 projects, mostly the government's infrastructure projects, worth Rp 22.3 trillion, which were tendered and completed the land preparation stage for construction next year.

The mining and petroleum sector, which was less affected by the economic crisis, would continue developing next year, it said.

Investment for construction in the country's property, industrial, infrastructure, mining and petroleum sectors could reach a total of Rp 44.9 trillion next year, it said. (jsk)