RI construction industry to grow by 100% this year
JAKARTA (JP): Investment in the construction industry is expected to almost double to Rp 80 trillion (US$ 10.2 billion) this year from Rp 44 trillion last year as a result of the recovering economy, an analyst said on Tuesday.
Director of construction information service company PT BCI Asia Emanuel Bineratno said the sharp increase in investment was still below its precrisis level of over Rp 110 trillion.
"It will reach this level in about two years from now," Emanuel said during the launching of the BCI Asia online information service.
He said infrastructure projects were leading the recovery of the construction industry.
"The most feasible projects amid the economic crisis are infrastructure projects funded by foreign loans," he said.
According to him, some 28 percent of construction projects this year were infrastructure projects such as roads, irrigation, and telecommunications.
Java, he said, dominated the road projects, while irrigation projects were mostly located outside Java.
He said these projects were mainly funded with Japan's Overseas Economic Cooperation Fund (OECF), which made up some 60 percent of this year's total investment.
Other financial institutions involved are the Asian Development Bank and the World Bank, he said.
"Without these loans the projects will simply stop," he explained, adding that the projects were funded with long term soft loans.
The average highest investment for each of the infrastructure projects reached only Rp 15 billion, he said.
In its monthly outlook BCI said that unlike before the crisis, this year's construction projects were mostly of a small and medium size.
"This will be the pattern for at least the next two years," the company said.
BCI estimated that projects such as roads, traditional markets, residential estates and industries processing local raw materials were presently in demand.
Whereas three years ago, the property sector, including office towers, five-star hotels as well as toll roads dominated the industry, BCI said.
Emanuel said that in 1999 the property sector contributed only Rp 17 trillion to the year's total investment of Rp 44 trillion.
In comparison, prior to the crisis, property investment alone could reach Rp 45 trillion, he further said.
He said at present the local construction industry faced no substantial problems, except that of political uncertainty.
"People here tend to delay projects as soon as political uncertainty sets in," he said.
He estimated the recent drop of the rupiah against the US dollar was temporary and would not have a great impact on the industry.
BCI regional manager Thor Kerr, meanwhile, said that its online service was the first in Asia to bring real time information on the construction industry via the Internet.
He said the company had invested about S$100,000 in developing the online information system.
The BCI website offers information on various construction projects in several countries.
Kerr said that aside from Indonesia, the website covered projects in Singapore, Malaysia, the Philippines, Brunei and China.
The company, he said, would report on 15,000 construction projects in East Asia over the next 12 months.
He expected to introduce an online tender service that would allow the participation of construction companies from various countries.
"But it's a slow process, we will have take it one country at a time," he said in reference to cooperating with governmental bodies for the tender process. (bkm)