New Study: Indonesia Infrastructure Report Q2 2016

From: Fast Market Research, Inc.
Published: Mon Feb 15 2016

BMI View : A significant infrastructure deficit across all key sectors in Indonesia, including power, transport and residential, will ensure growth in the country's construction sector is maintained throughout our ten year forecast period. Public private partnerships (PPPs) will increasingly be utilised to plug the public funding gap and Indonesia will continue to receive significant infrastructure investment from regional giants Japan and China. We note, however, that substantial barriers to private investment remain and while Indonesia does have ambitious development plans in place, the construction sector suffers from a track record of delays and incomplete projects.

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Our forecasts for construction industry value growth over 2015 are on track according to the latest figures for Q3 growth and we expect full-year growth to come in at 6.5%, accelerating slightly to 6.8% growth in 2016 as a number of large power and transport infrastructure projects break ground.

Japan maintains its position as one of the major sources of foreign financing with the announcement in December 2015 that it was providing funding of some JPY140.05bn (USD1.14bn) to support various transport infrastructure and energy projects through to 2019.

Demand for infrastructure development is high. The National Development Planning Agency, estimates that 2,650km of roads, 1,000km of toll roads, 15 airports, 24 seaports, 3,258km of railways and a combined 35,000MW of new power capacity are needed to achieve growth plans, while Indonesia also has a housing shortage estimated at up to 15mn units.

Risk/Reward Index

Indonesia has an Infrastructure Risk/Reward score of 56.2 in Q216 due to an uptick in the project pipeline.

Huge demand for new infrastructure development and openness to foreign investment mean Indonesia performs relatively well on the Rewards side, though a weak labour market hampers growth.

Indonesia's score for Risks is lower, due to widespread corruption and the lack of transparency in the tender process where state-owned enterprises often dominate.

The Indonesia Infrastructure Report features BMI Research's market assessment and forecasts covering public procurement and spending on all major infrastructure and construction projects, including transportation and logistics by land, sea and air; power plants and utilities, and commercial construction and property development. The report analyses the impact of regulatory changes and the macroeconomic outlook and features competitive intelligence on contractors and suppliers.

BMI's Indonesia Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Indonesian infrastructure and construction industry.

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Company: Fast Market Research, Inc.
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