New contracts: Construction SOEs to overcome obstacles in 2025
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.
Bisnis Indonesia - Kontrak baru: BUMN karya tebas aral 2025
6 February 2025
By Dionisio Damara Tonce
Several construction state-owned enterprise (SOE) issuers are setting optimistic targets for new contract growth this year. However, these plans face challenges due to the government's efficiency policy.
State-owned issuers, including PT PP (Persero) Tbk (PTPP) and PT Adhi Karya (Persero) Tbk (ADHI), aim to boost their new contract realisation after falling short of expectations last year.
For instance, PTPP aims to secure new contracts worth Rp28.44 trillion in 2025, representing a 5% increase compared to last year's realisation.
PTPP Corporate Secretary Joko Raharjo forecasts that growth will be driven by the construction sector, with the majority of contributions coming from building projects.
"PTPP has set a new contract growth target of 5% from the realisation in 2024, with the majority of contributions coming from buildings (31.19%), roads and bridges (26.47%), and ports (12.95%)," he told Bisnis on Wednesday (5/2).
Throughout 2024, PTPP secured new contracts worth Rp27.09 trillion. This value is lower than the realisation of the previous year, which stood at Rp31.67 trillion.
Contributions to the contract realisation in 2024 included building projects (33.42%), road and bridge projects (32.48%), mining infrastructure projects (17.70%), industrial projects (10.33%), port projects (4.14%), and other sectors (1.93%).
Meanwhile, the funding sources for projects in 2024 were dominated by government funds (43.35%), followed by SOEs (28.82%) and the private sector (27.83%).
Similarly, PT Adhi Karya (Persero) Tbk (ADHI) is targeting new contracts worth Rp25 trillion to Rp28 trillion in 2025. This is higher than the 2024 realisation of Rp20 trillion. “However, it is not final. Our forecast is between Rp25 trillion and Rp28 trillion,” said ADHI Corporate Secretary Rozi Sparta on Wednesday (1/1).
He explained that the largest contracts will come from projects by the Public Works Ministry and SOEs. There will also be several projects funded by company investments, including various public-private partnership (PPP) projects.
ADHI stated that it is prepared to implement business manoeuvres to address the infrastructure budget reduction and changes in the government's priority programmes this year.
To achieve its target this year, ADHI plans to increase its contracts from SOEs and the private sector. The company is focusing on growing its revenue by accelerating project completions, securing new contracts, and enhancing operational efficiency and cost control.
"The company has prepared its financial performance target for 2025 by considering the various existing potentials and challenges," he stated.
In reality, the performance of construction SOEs regarding their new contracts varies. PT Waskita Karya (Persero) Tbk (WSKT) recorded a new contract value of Rp9.6 trillion in 2024, a decrease from the 2023 realisation of Rp16.9 trillion.
Waskita Karya Corporate Secretary Ermy Puspa Yunita stated that the new contract value was achieved amid the company’s financial recovery and limited tender activities last year.
In 2024, new contracts from SOEs and regional state-owned enterprises (BUMDs) accounted for 43.3%, government contracts for 34.95%, and other sources for 21.8%.
On the other hand, PT Waskita Beton Precast Tbk (WSBP) secured new contracts worth Rp2.37 trillion throughout 2024. This realisation represents a 36% increase compared to last year's figure of Rp1.74 trillion.
This growth is supported by the ready-mix product business line, which contributed Rp913.17 billion, followed by precast concrete products at Rp881.09 billion, and construction services at Rp574.50 billion.
Challenges
The Prabowo-Gibran administration has implemented budget efficiency measures, which include reducing the infrastructure portion by 34.4% from the amount outlined in the 2025 State Budget (APBN).
One of the budgets affected is that of the Public Works Ministry, which will be reduced from Rp110.95 trillion to Rp81 trillion.
Kiwoom Sekuritas Indonesia Head of Research Sukarno Alatas believes that the performance prospects of construction SOE issuers face significant challenges, particularly due to the government's reduction of the infrastructure budget. Consequently, the market has responded negatively to the policy, as evidenced by the pressure on the stock prices of construction SOEs.
“The performance prospect of construction SOE issuers is not good. The market is responding poorly to the infrastructure budget reduction,” he added.
However, Sukarno believes that several factors could positively impact construction SOEs in the future. He mentioned that if economic recovery proceeds well, demand for construction services will increase. Additionally, supportive government policies can enhance the performance of the construction sector.
"If the economic recovery goes well, demand for construction services will increase. Additionally, regulations, cost efficiencies, successful debt restructurings, and consolidation plans can also generate positive sentiment," he explained.
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