Indonesia's Construction Sector Opportunity for Korean Construction Industry. Hari G Soeparto IAMPI

Transcription

1 Indonesia's Construction Sector Opportunity for Korean Construction Industry Hari G Soeparto IAMPI 1

2 KOREA 2

3 Map of Indonesia

4 Indonesia fact and figure Area: , 27 sqkm Population :242 Million GDP (PPP): $1.121 trillion (2011 est.) country comparison to the world: 16 GDP (Current exchange rate):$834.3 billion (2011 est.) country comparison to the world: 18 GDP - real growth rate: 6.4% (2011 est.) country comparison to the world: 38 at present may be number 2 GDP - per capita: $4,700 (2011 est.) country comparison to the world: 151 4

5 GDP & GDP/Capita 5

6 Gross Domestic Saving 350,000,000, ,000,000, ,000,000, ,000,000, ,000,000, ,000,000, Gross domestic savings (current US$) 50,000,000, Gross domestic savings (current US$) (5.00) Gross domestic savings (% of GDP) Gross domestic savings (% of GDP) 6

7 GROSS NATIONAL INCOME 800,000,000, GNI, Atlas method (current US$) 700,000,000, ,000,000, ,000,000, ,000,000, GNI, Atlas method (current US$) 300,000,000, ,000,000, ,000,000,

8 GFCF Gross fixed capital formation (annual % growth) Gross fixed capital formation (current US$) 300,000,000, ,000,000, ,000,000, (10.00) (20.00) Gross fixed capital formation (annual % growth) 150,000,000, ,000,000, ,000,000, Gross fixed capital formation (current US$) (30.00) (40.00)

9 Current Economic overview Despite Global Economic Downturn, Indonesia enjoy continous Growth of 6.5%. Strong sector for investment is transport, storage communication followed by mining and other infrastructure Construction real growth by 7% despite the growth in nominal value was 32% showing inflation in construction sector of 25%. Cement Price is fourth highest of 11 country studied in the region 9

10 Construction Sector Professional Service & Consultants Number of National Contractors around (90% smalll, 9%Medium, 1% big) Foreign contractors around 127 firms and 91 consulting company Building Material: due to high demand, inflation is high in construction material Permanent Construction worker personnel total construction workforce 4.5 million people Construction Equipment, industry is not develop despite high demand 10

11 Heavy Equipment in Indonesia After years of being in the doldrums in the wake of the 1997/1998 monetary crisis, Indonesia s heavy equipment industry began to revive in In 2004, sales were triggered mainly by the mining industry boom. The strong revival of heavy equipment business is also attributed to expanding agribusiness and forestry sectors. Furthermore, the construction industry began to grow in Meanwhile, the government has pursued infrastructure projects which required large numbers of heavy equipment. In the past eight years, sales of heavy equipment reached the highest level in 2007 with total sales of 7,506 units. The positive economic outlook for Indonesia in 2008 has created a mood of optimism among suppliers of heavy equipment. Agriculture, forestry, construction and mining sectors are expected to remain attractive markets for heavy equipment, driven by the expansion of forestry and agricultural plantations. (export.gov) 11

12 Project Sponsor/ Initiator Government Government Influenced Government Participation: PPP Private 12

13 NATIONAL ECONOMIC DEVELOPMENT PROGRAM 13

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15 6 Economy Corridors 15

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17 Strengthening the National infrastructure for connectivity Creating an integrated system of national logistics, national transportation system, regional development, and communication and information systems; Identify the transportation hubs and distribution centers to facilitate the logistical needs for primary and supporting commodities; Strengthening connectivity of intra and inter-corridors as well as global connectivity; Improve information and communication technology (ICT) networks to facilitate all economic activities, government activities, and national education sector activities 17

18 PROJECT WILL INCLUDE

19 Project will Include Infrastucture Highway Harbour Airport Waste Treatment Irrigation Water Treatment Power Distribution Generation Mining Oil and Gas Industrial Plant Petrochemical Chemical Mineral Processing Oil refinery Buildings 19

20 Major Project In Indonesia Plan for Roads & Bridges 59,921.6 Rail 65,832.7 Ports 12,662.8 Airports 8,085.6 Healthcare 95.0 Water 1,941.6 Power Plants & transmission grids 63,668.0 Oil & Gas Pipelines 1,608.6 Residential Construction 1,837.0 Industrial Construction 72,542.0 Commercial Construction 1,719.5 Million USD 289,

21 Method of Project Delivery Traditional Mostly used at goverment project, but trend is moving toward more integrated approach EPC Mostly use in industrial project and PPP projects Design/Build Mostly used in building project by developer a CM/EPCM Start to be used by certain industrial plant (EPCM) and building (CM) as well sponsor 21

22 Indonesia Construction Laws Law No. 18/1999: Government Regulation no 28/2000, no 04/2010, no 92/2011 Indonesian Institute to Develop Indonesia Construction Activities: CSDB (National Construction Service Development Board)- LPJKN 22

23 Foreign Contractors Involvement Permen no 5/2011 PU Permen 27/2008 ESDM PTK 007/TKDN Pertnership Requirement 23

24 Flow of New Permit for foreign Contractor Processing Document reqired according to Article 6.1 Complet e? Instruction Letter to pay Foreign business Entities pay to the bank Submission Piece 5th Prove of Payment Certificate Collected 24

25 Flow of Permit Extension for foreign Contractor Processing Document reqired according to Article 6.2 Complet e? Recommendation from supervising team Fulfilled Fulfiling obliigation as required Instruction Letter to pay Foreign business Entities pay to the bank Submission Piece 5th Prove of Payment Certificate Collected 25

26 Flow for data change Document reqired for: 1. Change address Article Change the head of repersentative Art Change compny name 6.5 Complet e? Pick up the sertificate 26

27 Flow of Permit Closing Document reqired as required in art 6.6 Complet e? Pick up the certificate of closing of representative office 27

28 For Oil and Gas According to Minister Regulation no 27/2008 Contractor should have Letter of Registration from Ministry of Energy and Mineral Resources Republic of Indonesia 28

29 Obligation to absorb Local Content In Oil and Gas Project Controlled by former BPMIGAS formerly directly under the President of the Republic of Indonesia now under Minister of Energy and Natural Resources, there regulations that contractors should use material and service from national source at least 40% (Total Domestic Content-TKDN), and will give a price preference depend on percentage of Total Domestic Content 29

30 REVIEW AND ANALYSIS 30

31 Basis of Analysis Factor Condition Regulation Natural Resources Labour Skill and Skill Professionals Supporting Industry Demand Condition Structure and Competition 31

32 Factor Condition Regulation : Is a highly regulated industry Resources Potencial is high Labour: many unskilled limited skill labour Professionals workers: limited 32

33 Supporting Industry Construction Equipment, is not sufficient as well as its operator Cement, is sufficient supply Steel Product, is sufficient, Fabrication and Manufacturer of Industrial Plant Equipment is available but limited capacity and capability, especially in engineered product 33

34 Demand Is quite high and still increasing No 2 Construction Market in the world 34

35 Structure and Competition A lot of small company but very view specialty contractors Tough competition Regulated by many bodies such as Construction Services Development Board (LPJKN), Ministry of Public works, Ministry of Energy and Natural Resources, Ministry of Labour 35

36 Conclusion Market is considerably high Market somehow is regulated for time being Competion is tough Better to package it with FDI 36

37 Q&A

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