Interview: Niko Safavi
In what ways are eco-friendly materials and sustainability-focused research and development (R&D) impacting the construction sector?
NIKO SAFAVI: Sustainability is not a fad but a priority for our customers that, if ignored, will negatively affect the long-term health of the market. Our R&D team is focused on prioritising raw ingredients and manufacturing processes that minimise not just our carbon footprint but our total environmental impact. Larger developers and retail customers are increasingly demanding product certifications and specifications to minimise their environmental impact, as well as transparency and clarity in labelling.
What are your expectations for growth in the domestic paint and coatings market?
SAFAVI: We are optimistic that expansion will be strong in the local paint and coatings market, while at the same time realistic about the factors that will impact this projected growth. Indonesia will need to remain an attractive destination for foreign direct investment (FDI); debt funding will be necessary, as will maintaining sovereign ratings. Political, fiscal and taxation policies will have to be mindful of how they impact FDI and the market, and the capital city relocation plans should enter the execution stage in President Joko Widodo’s second term. We have begun planning for the move, while recognising that painting occurs near the final stages of any construction project.
Where is there potential to help facilitate innovation among construction suppliers?
SAFAVI: The seeds of human capital development are planted in education policies. While Indonesia’s education spending as a proportion of GDP is relatively low, we expect public education will improve and evolve. Ultimately, it is expected that significant material innovations will originate from suppliers with a large global reach. What construction materials suppliers like us will do is bring those innovations to the local market, and provide the technical and educational support needed for these technologies to be embraced by the local construction industry and its consumers.
How do you measure the future competitiveness of Indonesian paint manufacturers, particularly in relation to imported products?
SAFAVI: While in the short term the size of the local paint market may vary from one year to the next, in the long term domestic demand will be high. With a large population and rising incomes, the need for higher-quality housing and more commercial buildings will translate into greater demand for construction materials going forward. Indonesia, however, is not yet a re-paint and maintenance market, which in itself is an attractive business in developed countries. Other than risks that may affect certain raw materials, we do not foresee supply constraints at the moment or in the near future. Demand for imported coating products will likely remain limited to highly specialised products, niche sub-brands and product variants.
Which steps can be taken to promote the use of green construction materials?
SAFAVI: Governments and industry players around the world are catching up to the demands of the younger, highly informed and risk-aware consumers who are leading the trend towards green construction. The authorities and businesses have complementary roles with some degree of overlap. For instance, both can help raise awareness about green construction materials and healthy buildings. Governments can also mandate the use of specific products and supplier certifications for public projects. This is something that is being done to some degree, and can be expanded without changing building codes and ordinances. We are seeing more of this in Indonesia and the government’s efforts towards this end have been encouraging.
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