INDONESIAN ECONOMY-I: TAKING INDONESIA CONSTRUCTION TO THE NEXT LEVEL
8 – 10 November 2017, Jakarta Convention Center
Indonesia Infrastructure Week, incorporating Konstruksi Indonesia and The Big 5 Construct Indonesia, brings together the country’s leading infrastructure/construction/building exhibitions, conferences, CPD-certified educational workshops and seminars under one roof, with the aim of supporting sustainable development across all facets of Indonesia’s national infrastructure development agenda.
Hosting over 12,000 industry – government buyers and decision makers, the event is the largest building and construction event in Indonesia and delivers an unparalleled opportunity for buyers and service-providers to meet and drive new business, as well as cultivating new partnerships between the public and private sector between Indonesian project-holders and the huge visitor numbers attending from around Asia and round the world.
This exhibition will showcase the latest equipment and technology for the construction industry at an important time in Indonesia’s development. The US$398 billion mega projects allocated for the country’s infrastructure development up to 2019 are expected to produce immediate benefits for South-east Asia’s largest economy. The Konstruksi Indonesia show is co-located with The Big 5 Construct Indonesia, which features international and local exhibitors from a wide range of building and construction sectors. The combined exhibition events take place in association with Indonesia Infrastructure Week.
The Big 5 Construct Indonesia exhibition is providing a host of CPD-certified educational workshops that are designed to keep the industry up-to-date with the latest developments in materials, methodologies, local business opportunities and legislation, as well as technology. There are dedicated building information modelling workshops that will educate on the adoption and implementation of BIM in the Indonesia construction industry, which are free to attend.
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BUILDING INFORMATION ADOPTION
In the last decade, building information modelling, also referred to as ‘BIM,’ has revolutionized the approach taken to projects by architects, engineers and the wider construction industry.
Probably the biggest contribution made by BIM is its ability to allow the various teams working on a project to perform collaborative activities.
The UK, the US and Australia have already embraced this technology in the construction industry in an unstoppable way. As the largest economy in Southeast Asia, BIM in Indonesia is now a prime market for this technology to really take off as construction in Indonesia is successfully attracting huge funding and the government is signing the public-private partnership deals that are facilitating the country’s rapid growth.
The reasons for BIM in Indonesia being poised for adoption include the country’s serious commitment to building its infrastructure, in line with the impressive increases in national connectivity and sustainable infrastructure development across its 34 provinces.
With a GDP of US$1.1 trillion, Indonesia is Southeast Asia’s largest economy and ranks as the 16th largest in the world. Southeast Asia is being viewed by the industry as a major growth area for both sustainable design and a shift towards a BIM mindset. A number of countries in the region are adopting a more concerted approach to the use of building information modelling, with Singapore taking the lead, Malaysia following suit and the use of BIM in Indonesia already underway with some high-profile projects.
Right now in Indonesia, the construction industry is witnessing the build of the first stage of the Gran Rubina Tower complex in the Indonesian capital of Jakarta, which is incorporating the building information modelling software to help work towards its sustainability and green construction objectives. The 22-storey, 180,000 m2 office complex, one of few greenfield high-rise developments left in Jakarta, is expected to consume 30% less energy than other skyscrapers in the region following its completion in 2018.
THE IMPACT OF SHORT FALLS IN INDONESIA INFRASTRACTURE ON ITS ECONOMY
For many years in Indonesia, infrastructure – particularly its significant shortfalls – was the major block to the country achieving higher economic growth. These included traffic congestion problems, regular power supply outage problems, and the capacity of existing airports and seaports.
The reasons behind the poorly performing economy were usually to do with projects failing to attract financial commitment from the private sector. Today however, there is a strong drive to improve Indonesia’s infrastructure requiring at least US$ 400 billion to be invested into this sector to achieve the President’s goal of 7% GDP growth by 2020 – a little over 3 years away. In contrast, last year the Indonesia economy saw GDP growth fall to 4.8%.
THE REASONS TO INVEST IN INDONESIA’S INFRASTRACTURE
THE LAND ACQUISITION ACT, 2012
The road map for the Indonesia economy development between 2011-2025 included Indonesia infrastructure projects totaling hundreds of billions of dollars. Due to domestic financing constraints, foreign funds were needed on an enormous scale.
When the government implemented the Land Acquisition Act in 2012, it sped up the process for procuring land, which had always been a major stumbling block for public-private partnerships (PPP). Now, the PPP framework has improved greatly, while tax holidays, investment guarantees and higher feed-in tariffs have done their bit to create a much more attractive regulatory environment.
So now, the Indonesia infrastructure shortcomings in the transportation and energy, water sanitation and waste management sectors are being viewed positively as an opportunity, not an obstacle for getting the economy moving. Economists in the industry predict that the Indonesia construction outlook will see a growth at a rate of around 6% a year between 2012-2025, and that in the same period, it will move from being the 10th biggest construction market in the world to the 5th.
The construction industry contributes a lot to the process of country development. Airports, roads, railways, schools, offices, shops and factories provide the right public infrastructure for activities such as services, commerce, utilities and other industries. The positive Indonesia construction outlook is not only important for its finished product, but it is, and will continue to (in)directly employ a large number of people and the Indonesia infrastructure developments therefore equal Indonesia economy gains.
OPPORUNITIES FOR CONSTRUCTION SUPPLIERS
State-controlled companies now play an important role in Indonesia’s construction industry. State-owned enterprises are more successful in being awarded public-sector contracts than their private competitors. Meanwhile, the vast majority of Indonesia’s 100,000+ registered building firms are small companies that cannot take on large-scale projects and the domestic market is therefore becoming more open to foreign suppliers of construction services. The Big 5 Construct Indonesia will bring together suppliers from across the globe to showcase their products and the latest innovations in the market.
Local and foreign cement and steel makers have begun to invest heavily in Indonesia to increase their output, while the production of glass, ceramics and other materials is also attracting increasing investor interest. Housing needs, rail and road networks, ports and airports, power generation and distribution all point to growing demand as the Indonesia economy matures and the growing population enjoys rising incomes. The recent property boom has driven up demand and the Indonesia construction outlook means this is becoming an increasingly attractive market for foreign companies to do business in.
Contractors and investors willing to deal with the short-mid term challenges can expect to enjoy long-term growth in Indonesia’s construction industry. The Indonesia construction outlook also means attractive opportunities for suppliers of building materials and companies selling or leasing equipment.
DATA RECEIVED FROM:
konstruksi Indonesia and the Big 5 Construct Indonesia III
konstruksi Indonesia and the Big 5 construct indonesia II
Indonesia Infrastructure Week 2016
Indonesia Economy- Profile- Construction and Marble
Indonesia Infrastructure Week 2017
International News and Markets