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State companies unaffected by change in development priorities
The government is placing infrastructure development as its second priority, allocating around Rp 419.2 trillion – significantly less than for human resources development.
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The Bakauheni-Terbanggi Besar toll road in Lampung was inaugurated by President Joko "Jokowi" Widodo on March 8. (Courtesy of/the Public World and Housing Ministry)
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tate-owned construction firms remain upbeat in their business outlook for 2020, even though a shift in the government’s development priorities — from infrastructure to human capital — might mean less work for them next year.
The government’s total expenditure in the draft 2020 state budget is projected to settle at Rp 2.52 quadrillion (US$176.96 billion), up by 7.9 percent from this year’s budget of Rp 2.34 quadrillion. The development of human resources is expected to take up Rp 1.02 quadrillion, equal to 40 percent of next year’s total spending.
Meanwhile, the government is placing infrastructure development as its second priority, allocating around Rp 419.2 trillion – significantly less than for human resources development.
Despite the shift, state-owned construction firms PT PP, PT Wijaya Karya (WIKA) and PT Adhi Karya said they were still optimistic about securing major contracts in 2020 and the years to come.
Most infrastructure projects in the past four years, especially toll roads, were awarded to state-owned construction companies. Besides government projects, they also get contracts from the private sector.
PT Waskita Karya, for example, is maintaining a positive business outlook as it has prepared a number of strategies to anticipate a fall in new contracts in the next few years.
“We will bid on tenders offered by other state-owned firms [and] private entities to secure more contracts next year,” PT Waskita Karya finance director Haris Gunawan said in Jakarta on Tuesday.
