Indonesia builder Wijaya Karya eyes asphalt, power
Janeman Latul. Reuters, Jakarta - 08/12/2010
PT Wijaya Karya (WIKA.JK), Indonesia’s biggest construction firm, plans to diversify into asphalt production and power generation, as it seeks to leverage growth in infrastructure development in Southeast Asia's biggest economy.
Indonesia's inadequate infrastructure is seen as an investment opportunity that could spur further foreign direct investment, and the government plans to increase infrastructure spending by 28 percent next year to $13.6 billion.
"Asphalt and power businesses are the two sectors that will benefit from the government commitment on infrastructure, as we plan to diversify our business portfolio," Bintang Perbowo, Wika's president director, told Reuters in an interview.
Indonesia currently imports about 80 percent of its asphalt, the main raw material to build roads. Road building in Indonesia has lagged regional peers, though car sales are now booming and toll road building is expected to pick up from 2013.
Wijaya Karya, 68 percent owned by the state, aims to become the country's leading asphalt maker with annual production of about 300,000 tonnes from its mine on Sulawesi island, versus national demand estimated at 1.5 million tonnes this year.
The company is also looking to move into power generation with investment of at least $550 million within three to four years, including a joint venture project for a 200 megawatts plant at Jakarta's port together with state port operator PT Pelabuhan Indonesia II, Perbowo said.
State utility PT Perusahaan Listrik Negara is investing in greater power generation and working with independent power producers to build more plants across Indonesia in a bid to cope with Indonesia’s long-running problem of electricity shortages.
"I hope the government cuts the tender process timing as the current scheme is too long," Perbowo said.