Source: The Jakarta Post
Despite the weak growth of the construction industry in the first
quarter of this year, the government’s infrastructure projects still
have good prospects over the next few years, an expert says.
“Government-related construction including reservoirs, airports,
seaports and highways will still have good prospects at least until the
end of 2018 as the projects have been specified and the budget has been
allocated,” Institute for Development of Economics and Finance ( INDEF )
senior researcher Iman Sugema said on Wednesday.
The Central Statistics Agency ( BPS ) reported on Wednesday that the
Business Tendency Index ( ITB ), an indicator of optimism in the
economy, fell to 99.46 in March, compared to 105.22 in the fourth
quarter last year. It could have happened because there was a
simultaneous drop in various business aspects such as revenues,
production capacity utilization and average working hours, according to
“It is different with private infrastructure projects because it is
related to the country’s economic growth. Infrastructure construction is
all about asset accumulation, which can only be reached if the
companies have savings to invest,” said Iman.
Indonesia's economy only expanded by 4.92 percent year-on-year ( yoy )
in the first quarter of this year, lower than 5.04 percent in the
previous quarter, the BPS added.
The House of Representatives is expecting the construction services
bill, a revision of the existing 1999 Construction Law, to be passed
into law in May, five months after the launch of the ASEAN Economic
Community ( AEC ), which is expected to create an integrated market for
capital, labor, goods and services within Southeast Asia.
An article in the bill stipulates that foreign companies or
businesspeople intending to carry out construction work in the country
will be obliged to set up a representative office in Indonesia or a
joint company with a local construction firm.
Representative offices will also be obliged to have a joint operation
with big national construction firm in their projects and to prioritize
the hiring of local workers and the procurement of locally sourced
materials and technology.