Construction SOEs on alert

This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.

Investor Daily - BUMN karya waspada

13 February 2025

By Muawwan Daelami

Construction state-owned enterprises (SOEs) are cautiously approaching the year 2025 following the government’s decision on budget efficiency, which also impacts the infrastructure sector. Market players initially reacted negatively, as evidenced by the poor performance of the infrastructure index for two consecutive days.

Infrastructure is one of the sectors with a significantly reduced budget. The budget ceiling of the Public Works Ministry has been cut by Rp81 trillion, from Rp110.95 trillion to Rp29.57 trillion. This efficiency measure follows Presidential Instruction Number 1 of 2025 on Budget Efficiency in the Implementation of the State Budget and Regional Budget for Fiscal Year 2025.

The infrastructure index experienced poor performance over two trading days from 10 to 11 February 2025. According to daily statistics from the Indonesia Stock Exchange (IDX), the infrastructure index decreased by 3.09% and 3.94%, reaching 12.22%. However, on Wednesday (12/2/2025), the infrastructure index recovered by 2.90%, reducing the overall decline to -9.68%.

In response to the volatile situation in the construction sector, construction SOEs such as PT PP Tbk (PTPP), PT Wijaya Karya Tbk (WIKA), PT Adhi Karya Tbk (ADHI), and PT Waskita Karya Tbk (WSKT) are adopting a cautious approach while closely monitoring market developments.

PTPP Corporate Secretary Joko Raharjo mentioned that the company is still conducting further studies regarding its performance target for 2025. "We are still reevaluating the current market condition," Joko told Investor Daily on Wednesday (12/2/2025).

Joko stated that PTPP will continue to focus on strengthening its core business in the construction sector and managing its business portfolio, always prioritising risk management.

An alert signal has also been raised by WIKA. WIKA Corporate Secretary Mahendra Vijaya does not deny that the budget efficiency measures within the Public Works Ministry have the potential to impact the company’s construction business, which has always undertaken government projects.

However, Mahendra mentioned that WIKA is continuously studying the impacts. To strengthen its performance in fiscal year 2025, the issuer with the ticker code WIKA is still targeting government infrastructure projects that support national resilience.

"WIKA is also ready to undertake EPCC projects that support energy security and downstreaming through SOE and private funding," Mahendra told Investor Daily.

Adhi Karya has also responded similarly, indicating that the company will make adjustments to its performance targets in light of the current situation. Adhi Karya Corporate Secretary Rozi Spart mentioned that, in line with the infrastructure budget efficiency measures within the Public Works Ministry, ADHI is shifting its project portfolio towards the SOE, private, and public-private partnership (PPP) segments.

"Regarding the urgency to revise the new contract target in 2025, stress test study finalisations are still required," Rozi told Investor Daily. However, as an initial plan, ADHI is targeting new contracts of Rp28 trillion this year. This target is higher than ADHI’s new contract target in 2024, which was Rp24 trillion.

Similar to other construction SOEs, Waskita Karya is also exploring the private market in addition to SOE projects to achieve its new contract target this year. Waskita Karya Corporate Secretary Ermy Puspa Yunita mentioned that the company is aiming for growth in new contract targets in connectivity and water resources this year.

Therefore, Waskita is optimistic about its new contract value growing with contributions from the government’s strategic programmes. "In 2025, we are targeting significant new contract value growth in each segment compared to the new contract realisation in 2024," Ermy revealed when contacted by Investor Daily recently.

Throughout 2024, Waskita recorded a new contract value of Rp9.6 trillion, a decline from Rp16.90 trillion the previous year. According to Ermy, this occurred amid financial recovery conditions and limited tender activities in 2024. Waskita’s new contract value in 2024 was sourced 43.3% from SOEs/regional state-owned enterprises (BUMDs), 34.9% from the government, and the remaining 21.8% from business development. "Currently, Waskita is focused on completing several projects to sustain the company’s business revenue and commitment to completing projects on time," Ermy added.

Stock recommendation

A stock market observer and Universitas Indonesia Faculty of Economics and Business professor, Budi Frensidy, believes that the challenges for construction SOEs this year are greater, as their projects are typically sourced from the Public Works Ministry and funded by the APBN. "To recover their performance, construction SOEs must secure projects from the private sector," Budi told Investor Daily on Wednesday (12/2/2025).

On a separate occasion, Mirae Asset Sekuritas Senior Market Analyst Nafan Aji Gusta recommended a wait-and-see stance regarding construction SOE shares, except for ADHI. "ADHI is given an accumulate buy recommendation with a target price of Rp230," Nafan mentioned.

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