Construction Companies | Toong-Khuan Chan, Krishna S Pribadi

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Construction Companies ByToong-Khuan Chan, Krishna S PribadiBookConstruction in IndonesiaEdition 1st EditionFirst Published 2022Imprint RoutledgePages 17eBook ISBN 9781003149866Share

ABSTRACT

The Indonesian construction industry is characterized by very few large construction companies and many small and micro enterprises reflecting a feature that is common in many other countries. Only 1% of the 250,000 contractors are classified as large contractors that are eligible to bid for projects exceeding IDR 50 billion or US$3.5 million. The industry is dominated by state-owned construction companies that are awarded most of the largest public infrastructure projects and account for large proportion of industry output. In the past two decades, these state-owned construction companies have been called upon to deliver on Indonesia’s national development strategy not only by taking on strategic and priority infrastructure projects but by expanding into turnkey energy and power project, to finance projects, and to develop, maintain, and operate public infrastructure such as toll highways. While these large projects bring large revenues to these contractors, the increased financing needs have put a strain on their finances with soaring debts. Concerns have been raised in the local media on the financial risks that these contractors are being obliged to take on to support the governments development agenda, with debt-to-equity ratios pushed to the limits. Non-state-owned contractors exhibit a more prudent approach to growth and debt.

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