Construction & Real Estate
From The Report: Indonesia 2018
View in Online Reader

Following several years of robust expansion supported by the launch and implementation of a major public infrastructure programme emphasising significant new transportation, utilities and social infrastructure builds, Indonesia’s construction industry is set to remain on a rapid growth path. State-owned enterprises continue to dominate the construction landscape, although the government has increasingly sought private sector participation in new builds. A growing middle class and rising levels of urbanisation have supported rapid real estate growth, and there remains substantial room for expansion in the coming years. While a commodities price crash and macroeconomic slowdown weighed on growth between 2013 and 2015, the sector began to regain its footing in 2016, with property sales forecast to rise for the first time in six years in 2017.

This chapter contains interviews with Wong Head Fine, Group CEO, Surbana Jurong; and Michael Widjaja, Group CEO, Sinar Mas Land.

Articles from this Chapter

Overview

Positive performance: The government’s infrastructure agenda is expected to drive sector expansion further
OBG
plus

Following several years of robust expansion supported by the launch and implementation of a major public infrastructure programme emphasising significant new transportation, utilities and social infrastructure builds, Indonesia’s construction industry is set to remain on a rapid growth path. State-owned enterprises (SOEs) continue to dominate the country’s construction landscape, although the government has increasingly sought private sector participation in new builds, with over 20 large-scale…

Interview

The right steps: Wong Heang Fine, Group CEO, Surbana Jurong, on making positive contributions to growth
OBG
plus

Interview: Wong Heang Fine What impact do you expect the ASEAN Free Trade Area (FTA) scheme to have on infrastructure development priorities for the region? WONG HEANG FINE: ASEAN countries have similar cultural traits and consumer behaviours, so it is easier for ASEAN companies to export their expertise within the region. Reduced tariffs and preferential tax treatment further facilitate this connection. The FTA’s impact will be crucial; however, it won’t be the main catalyst – economic development…

Analysis

A helping hand: Reforms to affordable housing construction regulations could lead to accelerated development
OBG
plus

Indonesia has a significant and growing shortfall of affordable housing. Existing supply is in poor condition, with rising demand for new units set to push the deficit beyond 15m units in 2018. Rising urbanisation is exacerbating the problem, and more than one-fifth of the urban population is now living in slums, presenting a major challenge for President Joko Widodo’s Nawa Cita national development agenda, a nine-pillar strategy launched in 2014 that emphasises domestic development, increasing…

Analysis

Revising policy: New regulations alter investment landscape for foreign firms
OBG
plus

Although Indonesia is home to one of the fastest-growing construction industries in Asia, with foreign direct investment (FDI) inflows to the sector surging between 2013 and 2015, FDI dropped to a seven-year low in 2016, even as the number of new projects increased. In a bid to bolster FDI inflows and provide greater clarity for investors, the government revised its negative investment list (DNI) in 2016, reducing several restrictions on foreign investment in the construction industry. Although…

Overview

Poised for a turnaround: After several years of subdued growth, residential sales and prices are rising
OBG
plus

A growing middle class and rising levels of urbanisation have supported rapid real estate growth in Indonesia, and there remains substantial room for expansion in the coming years. While the government has moved to prevent a real estate bubble, and a commodities price crash and macroeconomic slowdown weighed on growth between 2013 and 2015, the sector began to regain its footing in 2016, with property sales forecast to rise for the first time in six years in 2017. Bank Indonesia (BI), the…

Interview

Evolving needs: Michael Widjaja, Group CEO, Sinar Mas Land, on providing options for younger generations and new markets
OBG
plus

Interview: Michael Widjaja What segments are driving growth in the sector? MICHAEL WIDJAJA: The housing segment is the most important because there is a large market of burgeoning young middle-class buyers who are yet to realise the dream of owning their first home. As a developer, we have to position ourselves to accommodate this group by offering alternatives that meet their needs. To cope with the currently vast backlog of first-home buyers, Indonesia should follow what has been done in other…

Analysis

Online tools: Web-based property portals hold significant growth potential
OBG
plus

Online property portals were among the first e-businesses to benefit from widespread popular appeal in Indonesia, and new sites and apps serving the Indonesian market have proliferated over the last decade. Recent entrants have sought to move beyond the traditional classified-listing model, with larger property sites increasingly diversifying service offerings to include real estate news, online forums and economic reports, while recent entrants have adopted innovations including location-based…