Boston, MA -- (SBWIRE) -- 12/20/2012 -- BMI View: We are maintaining our 6.9% growth forecast for Indonesia's construction sector in 2012. Although construction activity in Q212 remained as strong as in Q112, we do not see significant scope for Indonesia to outperform in H212, due to challenging global economic conditions. Looking beyond 2012, we are cautiously optimistic about construction and have slightly revised up our real growth forecasts for the sector to 7.2% in 2013 (from a previous forecast of 7.0%). That said, several downside factors (i.e. deepening deficit, bottlenecks in project execution and the 2014 presidential elections) continue to prevent the sector from maximising its growth potential.

The key factors that will facilitate growth are:

- In September 2012, Pelindo II selected Pembangunan Perumahan (PTPP) for construction work worth (US$857mn) at the Kalibaru project. The company won a tender for six construction projects, which will involve the construction of a container yard, a breakwater disposal, a breakwater container yard and some overburdening and reclamation work. Construction work is likely to start in Q312 and be completed in 2017.
- In September 2012, the Toll Road Regulatory Agency (BPJT) announced that the tenders for two toll road projects - the US$677mn, 36.3km toll road from Serpong to Balaraja in Java and the US$583mn 62.4km toll road from Medan to Tebing Tinggi in Sumatra - are scheduled to be launched in October 2012. The land acquisition process is expected to be finished by early 2013.
- In September 2012, Indonesia-based coal miner Bukit Asam aims to sign a power purchase agreement with PLN for the 1,240 megawatts (MW) Sumsel-8 coal-fired power plant in Tanjung Enim, South Sumatra. Bukit Asam won the tender for the US$1.59bn project with state-owned Chinese power company China Huadian Corporation in December 2011. The joint venture is also working to secure US$1.1bn in loans from China Development Bank.
- In August 2012, Indonesian President Susilo Bambang Yudhoyono signed the long-awaited regulation on land acquisition. The regulation, known as the Law No. 2 of 2012 on Land Acquisition for Public Interest Development, could pave the way for greater speed and clarity in Indonesia's land acquisition process.
- In August 2012, Adhi Karya announced that it plans to revive the project to build a monorail in Jakarta. The 13km monorail project is expected to cost around US$390mn and will connect from the Tanah Abang commercial area in Central Jakarta to the Senayan area in South Jakarta. Adhi Karya plans to establish a holding company comprising several state-owned enterprises to develop the project and has already submitted its proposal to the State Enterprises minister.

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