Construction sector grows by 10% next year: Analyst

A'an Suryana, The Jakarta Post, Jakarta

The country's construction sector is expected to grow by between 9.5 percent to 10 percent next year on the back of strong domestic consumption, an analyst said Thursday.

"Greater economic growth next year would raise the public's purchasing power. The construction sector would benefit from this," Indonesian Contractors Association (AKI) chairman Sutjipto told reporters on the sidelines of a construction seminar held at the Hotel Kartika Chandra in Jakarta.

The government initially predicted economic growth of five percent, but, following the terrorist attack in Bali more than two weeks ago, the projection was revised to four percent on Thursday.

It is still higher than last year's growth of 3.5 percent. Gross domestic product (GDP) growth for this year has been predicted at four percent, but many analysts say the actual figure could be lower.

The construction sector recorded record growth of 14.86 percent in 1994. But, the sector contracted 36.46 percent in 1998 during the peak of the economic crisis, when the country's economy shrank by 13.01 percent.

AKI forecast the construction sector to grow 9.5 percent this year.

Thor Kerr, a director of property consultant Building Construction Interchange (BCI), said Indonesia's market would still be dominated by construction of onshore and offshore petroleum production and distribution facilities, infrastructure projects the development of traditional markets, shopping malls and housing estates.

Throughout the economic crisis, the construction market has been sustained by the oil and gas industry, strong levels of domestic consumption and foreign aid.

"Despite the declining levels of foreign investment, it remains the largest national market for construction in Southeast Asia," he said, without providing details.

According to the BCI projection, the country's retail building sectors would grow by 21.02 percent, residential by 18.21 percent and offices by 14.73 percent.

Total investment in the country's construction sector next year would reach US$2.177 million (RP 21.770 trillion), it said.

Construction sector growth: 1994 (14.86%), 1995 (12.92%), 1996 (12.76), 1997 (7.36), 1998 (-36.46), 1999 (-1.63), 2000 (4.30), 2001 (8.50), 2002 (9.50).