PT Pembangunan Perumahan (PP) Tbk received numerous contracts worth nearly IDR700 billion in the second quarter of 2022, mostly from state-owned enterprises (SOE). Its capital expenditure (Capex) composition amounts to IDR645 billion for the primary subsidiary, the non-primary subsidiary with IDR 1.23 trillion and affiliated companies IDR16 billion. PP will focus on primary strategic government projects.

PP is a state-owned company in the construction sector, which includes real estate, property, investments in infrastructure and energy. The company is one of the main players in national construction across Indonesia.

Domination of SOE contracts

PP's project composition consists of a parent company at 70.18%, and subsidiaries at 29.82%. In business, its composition consists of construction projects 62%, EPC (engineering, procurement and construction) 8% and subsidiary 30%. By Q2 2022, its Capex reached IDR1.898 trillion, an increase of 115% from the previous year of the same period in 2021 at IDR882 billion.

PP received the contract worth IDR13.55 trillion, which is an increase of 41.9% from the previous year (YoY) worth IDR9.549 trillion.

"The new contract that PP received until the end of July consists of several large projects," PP Corporate Secretary Bakhtiyar Efendy said on August 16, 2022.

According to Efendy, the contract is worth IDR13.550 trillion until the end of July 2022. The company is continuously trying to achieve its target. The project consists:

• Kalibaru Terminal project in Priok Harbor worth IDR3.83 trillion
• Semarang-Batang gas pipeline project worth IDR1.06 trillion
• Pertamedika Sanur Bali hospital project worth IDR621 billion
• Work Unit Rate Earthwork worth IDR421 billion
• Serang-Panimbang toll road interchange worth IDR341 billion
• Landmark BSI Aceh building worth IDR296 billion
• The interior of the Attorney General's Office project worth IDR286 billion
• Benoa harbor project worth IDR232 billion
• Halim Perdanakusuma airport project worth IDR207 billion, and
• Last subsidiary worth IDR4.04 trillion.

Until July 2022, the contracts were dominated by SOE which contribute 74% by PP, the government at 22% and lastly private ventures worth 4%.

Challenges on construction industry

According to Adi Papa Pandarangga, Senior Research Fellow of the Resilience Development Initiative, construction as an industry went down while as a sector it became the savior for the national economy.

However, other negative impacts struck the industry. A number of construction companies receive profit loss because of the pandemic, and projects are postponed resulting in bloating budget.