Weakening Rupiah Forces Central Java to Re-evaluate Road Projects as Asphalt Prices Soar

The Central Java Provincial Government has been forced to conduct a thorough evaluation of its road infrastructure development programme. The move follows a surge in asphalt prices triggered by the increasingly weak exchange rate of the rupiah against the US dollar. Efforts by the provincial government to boost infrastructure through a budget reallocation of Rp200 billion are now colliding with economic reality, as the rupiah’s breach of the Rp18,000 per US dollar mark has directly impacted the cost of construction materials, particularly asphalt. Central Java Regional Secretary Sumarno stated that his office is recalculating the impact of the raw material price hike, noting that most projects are currently in the tender process. “We will recalculate the impact of the increase in road construction raw materials influenced by the dollar. The regional government is striving to ensure all projects proceed as planned, despite facing the challenge of rising material costs,” Sumarno said. Sumarno acknowledged the challenging situation, given the absence of regulations allowing mid-project contract value adjustments (price escalation), unlike policies in place a few years ago. Head of the Central Java Public Works and Spatial Planning Agency, Henggar Budi Anggoro, revealed that price increases have occurred across nearly all construction components. Asphalt, a primary component, has now reached approximately Rp2 million per unit. Henggar cited the repair of the Randublatung-Cepu road as a significantly affected project. “We are currently recalculating. The handling of the Randublatung-Cepu road, previously budgeted at Rp5.2 billion, has now soared to Rp34 billion,” he explained. Despite an additional budget of Rp200 billion from the regional budget reallocation, the drastic increase in material costs threatens to reduce the planned target for road stability percentages. The material price increases of up to 20 percent are causing unrest among construction service providers and contractors in Central Java. Suyuti, a contractor in Semarang City, admitted difficulty in calculating the value of ongoing projects. Timpuk, a contractor from Temanggung, expressed hope that the regional government would promptly issue a discretionary policy regarding the material price rises, arguing that it is impossible to halt projects midway due to cost increases beyond their control. The Central Java Provincial Government affirmed its determination to complete road repairs, particularly on severely damaged sections, while seeking solutions for the swelling financing burden.