Our world competitiveness ranking has risen: Eddy Wardoyo

Our world competitiveness ranking has risen: Eddy Wardoyo

These are exciting times for Indonesia. For starters, the monumental shift of its capital from Jakarta to Nusantara, a $ 30-billion investment testament to writing a new chapter with innovation and sustainable development. Poised at the brink of transformative growth, the country’s dynamic constru...

These are exciting times for Indonesia. For starters, the monumental shift of its capital from Jakarta to Nusantara, a $ 30-billion investment testament to writing a new chapter with innovation and sustainable development. Poised at the brink of transformative growth, the country’s dynamic construction and infrastructure landscape is set to unfold a vista of opportunity. Further, Indonesia is on the cusp of channelling substantial investments, earmarking a staggering $ 50 billion for bilateral trade relations. Little wonder then, that His Excellency Eddy Wardoyo, the Consul General of the Republic of Indonesia in Mumbai, exuded a quiet confidence when he met FALGUNI PADODE, Group Managing Editor, in his office. Having navigated the corridors of policy analysis during his tenure in Delhi from 2012 to 2016, the Consul General’s focus is now different. “Here in Mumbai,” he shared with a chuckle, “I look at the implementation of policy!” As we explored the myriad opportunities Indonesia presents in construction and infrastructure, it became abundantly clear that his guidance serves as a beacon, beckoning Indian investors to join in the nation’s journey of development. Excerpts from the interview: Please share your views on how attractive the Indian market is for your construction industry, in terms of JVs, technology transfer, financing and market expansion. India holds immense strategic importance for Indonesia. A major strategic partner in Asia, India is Indonesia’s maritime neighbour with an economy growing at a fast pace. With a population of more than 1.44 billion, the increasing spending power of India represents enormous business potential for Indonesia. While Indonesian investment in India remains relatively modest, standing at about $ 647 million (April 2000 to March 2017), Indonesian companies have started establishing their presence in various sectors. Among the Indonesian companies operating in India, seven are engaged in agriculture and food, while others are active in diverse sectors such as highways, airports, oil refineries, infrastructure, banking and transportation. Indonesia holds the 33rd position in terms of FDI inflows to India during the period spanning April 2000 to March 2023. Both countries need to have a more diversified basket of goods and services to take the economic partnership to a new level and reach $ 50 billion bilateral trade in 2025 as aspired to by both leaders. Please mention in brief the construction sector's contribution to your economy. The Indonesian construction market is estimated at $ 284.17 billion in 2024 and expected to reach $ 407.87 billion by 2029, growing at a CAGR of 7.5 per cent during the forecast period (2024-2029). Indonesia’s construction sector is the fourth largest contributor to the economy. Driven by the current government’s ambitious infrastructure plans, large-scale infrastructure developments have become the norm in the archipelago. Supported by its strong manufacturing sector, Indonesia’s construction materials market is anticipated to grow significantly over the coming years. Indonesia's construction industry is expected to grow by 4.2 per cent in real terms in 2024, before recording average annual growth of 6 per cent from 2025 to 2027. The industry's growth over the forecast period will be supported by the government's focus on infrastructure and energy development, coupled with investment in the development of the country's new capital Nusantara (IKN). In September 2023, the Indonesian parliament passed into law the IDR 3.3 quadrillion ($ 216 billion) state budget for 2024. The budget will support the government’s focus on accelerating development projects and includes investment in the construction of roads, smelters and a government centre in IKN. As part of the 2024 state budget, the government announced an allocation of IDR 422.7 trillion ($ 27.7 billion) to work on infrastructure projects next year; this marks the highest infrastructure budget in the last five years and is 5.8 per cent higher than the 2023 infrastructure budget realisation that is expected to reach IDR 399.6 trillion ($ 26.2 billion) this year. What is your nation's ranking in the international market segment? Indonesia's world competitiveness ranking has risen 10 places from 44 in 2022 to 34 in 2023 on account of massive infrastructure development. This is the highest rise in the world. In the past eight years, 161 national strategic projects (PSNs) have been completed with total worker absorption reaching 11 million. The increase in the number of workers is one of the factors that has increased Indonesia's competitiveness. What, according to you, is the USP of your construction sector? The construction business is a compelling business opportunity in Indonesia because the country is embarking on an ambitious infrastructure development plan, investing heavily in roads, bridges, airports and other essential facilities. This surge in construction projects creates significant demand for skilled contractors and builders. The construction market in Indonesia has witnessed significant growth in recent years, driven by various factors such as rapid urbanisation, government infrastructure initiatives and increasing investment in the real-estate sector. Being the largest economy in Southeast Asia, Indonesia offers vast opportunities for construction companies to capitalise on its developing market. The construction market in Indonesia has experienced steady growth over the past decades. The market offers ample opportunities for both domestic and international players, with increasing demand for residential commercial and infrastructure projects. Moreover, with a growing population and increasing urbanisation, there is a pressing need for residential, commercial and industrial spaces. Please tell us about overseas projects undertaken by Indonesian companies. The expansion and involvement of Indonesian contractor companies in overseas engineering projects have significantly increased, notably in three major regions: Southeast Asia, the Middle East and North Africa. Several considerations motivated the contractors to pursue overseas projects; the main ones were to increase profitability, government stimulation, market expansion and globalisation ambitions. The main market entry modes considered by contractors were found to be the formation of strategic alliances, the establishment of representative offices and taking part in joint venture projects. In which construction sectors are your contractors most active? Domestic players do have a strong presence in the Indonesian construction market. These companies have local expertise, established networks and knowledge of regulatory requirements. The key sectors in the Indonesian construction market are commercial, industrial, infrastructure, energy and utilities, institutional and residential construction. A few leading contractors in the Indonesian construction market are PT PP (Persero) Tbk, PT Wijaya Karya (Persero) Tbk, PT Adhi Karya (Persero) Tbk and PT Hutama Karya (Persero). As in 2023, how many contracting projects have been undertaken in India by your companies and what is their worth, including technical consultancy projects? Please share details of some noteworthy projects in India. PT Sumber Mitra Jaya has undertaken four projects for the National Highways Authority of India. The Bukaka company is supplying aerobridges to the Airports Authority of India. Salim Group from Indonesia invested in a petroleum refinery, real estate and industrial township project in West Bengal, but later withdrew owing to land acquisition issues. Are there plans to collaborate with Indian construction firms in other countries? Collaboration in the construction sector can serve as a testament to the commitment of both nations to deepen their economic and trade ties. Collaborative efforts seek to enhance connectivity, attract investment and foster economic growth in the region.

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