Construction & Real Estate
From The Report: Indonesia 2020
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Indonesia’s economy averaged 6% annual GDP growth in the years following the 1997-98 Asian financial crisis. However, by 2013 approximately one-third of the budget was being channelled into unprofitable fuel subsidies at the expense of infrastructure development. This meant that industry and transportation did not develop in line with economic gains, stunting growth of the construction sector in turn. Moreover, a deceleration in economic growth in 2014-15, coupled with rising property prices, ignited fears of a property bubble. This prompted the central bank to impose higher interest rates and larger minimum down payments for mortgages, while also curtailing lending for second-home mortgages to prevent an accumulation of housing debt. However, a commodity price rebound in early 2019 saw several incentives introduced to reinvigorate the property market. These included lower interest rates, a relaxed loan-to-value ratio and smaller minimum down payments, while mortgage lenders also implemented schemes to entice the growing young middle class. This chapter contains interviews with Wong Heang Fine, Group CEO, Surbana Jurong; and Niko Safavi, President Director, Mowilex Indonesia.

Articles from this Chapter

Overview

Capital investment: A strong infrastructure pipeline and plans to relocate the capital spur optimism for medium- and long-term growth
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In the years following the 1997-98 Asian financial crisis Indonesia’s economy experienced robust growth, a result of the commodities boom of 2001-12, spurred in part by the exponential development of both India and China. During this period the country averaged 6% annual GDP growth. However, by 2013 approximately one-third of the government’s budget was being channelled into unprofitable fuel subsidies, and the development of much-needed infrastructure was neglected. This meant that industry…

Analysis

Self-sufficient ambitions: Strengthening the automotive segment is seen as a means to reduce steel imports and bolster value-added production
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Steel consumption in Indonesia is forecast to rise from 15.1m tonnes in 2018 to 22.7m tonnes in 2024. Most demand is expected to come from the government’s infrastructure drive; however, a limited production capacity and highly competitive prices for imported steel has led authorities to call for greater investment in its steel industry and for the expansion and diversification of value-added steel production. Officials hope the drive to create a more accommodating regulatory environment…

Interview

Transforming infrastructure: Wong Heang Fine, Group CEO, Surbana Jurong, on making the country a centre for sustainable building models
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Interview:Wong Heang Fine How can new technologies be leveraged to assist urban developments in the medium term? WONG HEANG FINE: Technology is paving the way for data and analytics to make a major impact on infrastructure development and sustainability. To begin with, everything needs a master plan. We use digital twin technology in our design process, which creates a digital representation of a physical object or system. This allows us to perform various simulations before development commences,…

Overview

New listings: Government and private sector finance initiatives are poised to reinvigorate the property market
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As an economy largely dependent upon private consumption and commodity prices, Indonesia’s property market is sensitive to fluctuations in both areas. Since the Asian financial crisis of 1997-98 Bank Indonesia, the central bank, has been understandably cautious whenever market anomalies are identified. As a result, a deceleration in economic growth in 2014-15, coupled with rising property prices, ignited fears of a property bubble. This prompted the bank to impose higher interest rates…

Interview

Broad stroke: Niko Safavi, President Director, Mowilex Indonesia, on the future of the domestic paint and coatings market
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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…

Analysis

Integrated expansion: To achieve more sustainable urban redevelopment, communities are being established near new transit centres
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The completion of mass rapid transit (MRT) systems, intercity rail links and toll roads in recent years throughout Indonesia has heralded the emergence of transit-oriented developments (TODs) in real estate. These are intended to maximise the convenience of major transport centres, thereby reducing the collective dependence on private motor vehicles. TOD Communities A modern TOD typically constitutes a multi-purpose, pedestrianised community hub that contains places of residence, employment…