The Rise of Precast Concrete Market

Based on data from Pracemic Companies Association and Pratama Indonesia (AP3I), the company currently has 46 companies. They consist of 23 precast concrete producers and 23 precast concrete installers. Of these, as many as 30% of them are children of state-owned enterprises, the rest are private producers. The production capacity of precast concrete each year shows an increasing trend. If in 2015 the production capacity of national precast concrete recorded 25.30 million tons, the next year rose to 26.70 million tons. In fact, in the last year the figure jumped to 35 million tons.

With this positive trend, AP3I Chairman Wilfred has often encouraged private precast concrete producers to increase the quantity and quality of their producers. It aims to achieve the target absorption of precast concrete material by 30% in national infrastructure projects in 2019 or equivalent to 40 million tons per year. With regard to the precast concrete industry prospect, PT Wijaya Karya Tbk Concrete Management Tbk. (WTON) believes that this year's precast concrete demand is still positively driven by the construction of large-scale projects. Although a number of government infrastructure projects Joko Widodo will be completed this year, Marketing Director of PT Wijaya Karya Beton Tbk. (WTON) Kuntjara said that other major projects in the field of energy and transportation are still driving the huge demand for precast concrete in the country.

"We are optimistic that precast is not solely in the infrastructure sector, but also in the energy and transportation sectors. There are still several power plants to be built in relation to the construction of a 35,000 MW electricity project, "he said after the inauguration of a four-tiered concrete product factory in Lampung Selatan last weekend. Kuntjara mentioned a number of large-scale projects that will be supplied by WTON this year namely Asam-Asam Power Plant in South Kalimantan, light rail transit (LRT) Jabodetabek, mass rapid transit (MRT) Jakarta, train reach fast (high speed train / HSR) Jakarta-Bandung.

"Besides, there are some tolls, especially in Jakarta. In addition to our participating LRT, MRT Jakarta and HSR Jakarta-Bandung remain our target ". President Director WTON Hadia Pramudita added that a number of ongoing government projects, such as the construction of a million homes for low-income communities, as well as dock and airport projects in some areas are still supporting domestic precast concrete demand. "We are confident that the demands of precast concrete for this year will be more. Needs of ifrastruktur still continue for the future, especially for rail and housing ", he explained.

After the expansion of the plant in South Lampung, WTON's plant production capacity reaches 3.20 million tons per year and is targeted to reach 3.40 million tons by optimizing the plant in West Java and South Sulawesi. Similarly, WTON, the management of PT Waskita Beton Precast Tbk. (WSBP) is also optimistic the condition of precast concrete industry opportunities in Indonesia, this year is still big due to the many projects acceleration of infrastructure development being carried out by the government.

Corporate Secretary of WSBP Ratna Ningrum said that the optimism is because besides completing the infrastructure projects being constructed, the government will also tender for several projects, such as Semarang-Demak toll road. "The project is 1 million houses, railway lines, and electricity infrastructure related to the project target of upgrading electrical capacity up to 35GW in 2019." He said in Jakarta last weekend. This year, the company targets the production capacity of pre-cast precast concrete to increase by 500,000 tons to 600,000 tons. Throughout the year, the company's pre-printing capacity is 3.25 million tons, an increase of 18.46% from 2016, which reached 2.65 million tons.

In 2017, the company produces precast concrete around 2.1 million tons or represents a utility rate of 70%. "The utility in 2018 is also averaged at 70%. This capacity increase comes from two new WSBP plants in Penajam and Medan as well as an increase in existing production capacity, "said Ratna.

Set Usage
The rise of companies, especially the children of state-owned enterprises, by building new factories is feared to bulldoze the existence of small and medium-sized precast concrete factories. Therefore, Minister of Public Works and People's Housing Basoeki Hadimoeljono said that in order to increase private participation in infrastructure development, the ministry plans to regulate the use of construction materials including precast concrete used by large contractors who are majority state-owned enterprises. Under the policy, large contractors are only allowed to use 50% of their own subsidiary construction production, the rest are required to use the construction material of private producers.

The plan of the Minister of PUPR did not create any turmoil among precast concrete producers. As Wilfred said Often, government policy to restrict SOEs in using precast concrete materials of their subsidiaries will not have a major effect on the nationwide supply chain of precast industries. The reason, so far BUMN Karya chose to use precast concrete material from its subsidiary is driven by the factor of the need for precast concrete with special specifications. Similarly with Ratna Ningrum. According to him, the limitation on SOE Karya to use construction materials from its subsidiaries in this infrastructure project will affect the performance and strategy of the company. Because the PUPR project managed by WSBP is only under 5% of the total contract value managed by the company.

Although the government shows its attention to small and medium-sized companies, it does not mean they have to stand by. They also need to respond to precast concrete business opportunities as swiftly as SOEs do. The importance of healthy competition should be put forward.