PT. Visi Globalindo Data Utama predicts that the construction sector will grow stagnating in 2018. Earlier, this sector increased by 1.57% to 6.79% in 2017, if compared to the year 2016. Meanwhile, in 2018, the growth is predicted to reach some 6.64%.
The commitment of the government to continue their infrastructure projects and to increase connectivity in all regions of Indonesia has brought positive impacts for the shares of construction companies and the on-going construction projects, which are scheduled to be completed in 2018.
From 2015 to 2019, the government has allocated a total budget of IDR 1,375 trillion for the infrastructure sector. The number is significantly increased if compared to IDR 921 trillion allocated from 2005 to 2014.
However, the improvement of the construction sector is not necessarily rewarding all players in the industry. There are still lots of obstacles faced by the players, such as the intense competition level to be overcome. The increasing number of sub-business units (subsidiaries) of large-scale companies could also be a problem for the low-middle players in capturing a construction project.
Furthermore, high accidence rate in the Indonesian construction sector (12 work accidences within the last 7 months) could also be a significant obstacle to deal with. It is a fact that high accidence rate will lead to the increasing demand from workers toward their workplace safety, and eventually will increase the operational cost of the construction players. Therefore, although they can increase the number of their projects, the construction players cannot improve their profit significantly. In the worst scenario, in fact, with a similar number of projects to handle, the players have to face a decreasing profit or event suffering a loss. These also become one of the main problems that led to the increasing number of protests from construction workers in the year 2017.