Here are some details about what's happening in Indonesia and also the expectation on each details as well.
- Indonesia has buoyant economy, growing urbanization, and relative political stability. The country's population has doubled in 30 years, increasing demand for property and providing rapidly expanding labor force.
- Current cement consumption in Indonesia of 226 kg/capita is quite low. With about 250 million people and the needs to have a better living condition, demand for housing, commercial buildings and supporting public facility is expected to grow strongly.
- Indonesia is currently having poor transport infrastructure. The government's spending on infrastructure, as a percentage of GDP, is expected to continue to increase. The release of the 2011-2025 Master Plan for the Acceleration and Expansion of Indonesian Economic Development highlights the infrastructure opportunities (total projects are 367) with total investment value of about 470 BUSD. The government has put their effort to remove obstacles to investment, including reforms to land acquisition, investor protection in the case of default, labor laws and excessive bureaucracy, and corruption at various levels. However, the lack of institutional capacity or regulatory reform has hampered this effort to lure investment in these infrastructure projects. Hence, we expect that the implementation will take longer time than the government's plan.
- We expect that construction will grow by 7-8% per year over the next 5 years.