D. Setiaji Hadiprayitno on Optimism for the Future of the Construction Industry in Indonesia

Interviewed by Anton Adianto

It’s been more than six months since the world has grappled with the pandemic, but much remains unknown about the virus. Regardless, daily life and the economy must go on. Indonesia also faces significant challenges, especially in the construction, property and infrastructure sectors. Does reality on the ground really provide real optimism for the future of the construction industry in Indonesia? D. Setiaji Hadiprayitno, the country representative of AECOM Indonesia, shares his insights with Construction+ Indonesia about the pandemic and the new normal, projects that are restarting as well as our response to this unprecedented challenge.

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What are your thoughts about the pandemic situation in Indonesia?

Market activity has slowed down significantly and businesses have reported losses. There is concern in the market about how long this will last and how much this low demand will impact their growth and future investments. The situation will vary from sector to sector, but for the immediate term, I think many projects with public-private partnership (PPP) and private participation in infrastructure, like roads, railroads, ports, airports that involve the private sectors, should start adapting for a new tomorrow, whether with existing or upcoming projects.

The only certainty after the pandemic is that changes are inevitable. During this period, it is encouraging to note that many industry players are not passively waiting but are trying to learn new approaches: in financing, delivery, safety, operations and so on. There is a renewed eagerness to learn and change, which I believe will transform the way project owners can operate moving forward.

What does that mean for upcoming projects?

Many projects across different sectors, such as design; planning and economics; environment; energy; as well as industry and construction management are still progressing well. Some of the signature projects are The Nusa Dua, Bali (PT Pengembangan Pariwisata Indonesia); Batuta Chemical Industrial Park Master Plan, East Kalimantan (PT Batuta Chemical Industrial Park); Grand Dharmahusada Lagoon, Surabaya, East Java (PT PP Properti Tbk.); Kamojang Geothermal Power Plant Unit 2-3 rehabilitation project, West Java (PT PLN (Persero)); Wayang Windu Unit 2 Geothermal Power Project, North Sumatra (Star Energy Geothermal Ltd.);  Cikarang CCGT Power Station (PT Cikarang LIstrindo); Batang Industrial Estate, Central Java Province (Collaboration between PT PP (Persero) Tbk., PT Kawasan Industri Wijayakusuma (Persero), PTPN IX and Batang Regency Government); IKEA Jakarta Garden City, Cakung, Jakarta (Archipelago Property Development); LRT Phase 2A & 2B, Jakarta (PT Jakarta Propertindo (Jakpro)); and Sea Toll Lempasing, Bandar Lampung.

In AECOM, we recently discussed these issues and addressed how the coronavirus has changed how governments and the industry has approached new infrastructure and city planning globally in our latest report called the Future of Infrastructure, which we release annually. We looked at how we need to adapt today, and how the pandemic is a reminder that we have to ensure that projects and cities are resilient to shocks: not only is it important to keep the population safe, we also have to ensure that economic opportunities will be available to all. These principles, while not new, should guide us if our future projects are to have a meaningful impact.

How will construction adapt to the ongoing crisis?

Construction projects need to adapt fast to the new normal as a result of Coronavirus for all of us to return to work efficiently while keeping our people safe. The coronavirus pandemic has added another risk to already high-risk construction projects resulting in a new set of precautions to be incorporated into our operational processes. But I understand that gradually with time people will be able to take the fear off their minds to return to some level of normal work practices even after the pandemic ends and it will be the same for the construction industry.

In terms of managing construction sites in Indonesia, AECOM plays key roles in design and construction management as well as in technical diligence. We responded quickly to the emerging coronavirus situation by activating our resilience team which set up the prevention measures framework. We have created a special task force at every work site implementing  stringent contagion prevention programs that include Coronavirus awareness to all employees, active risk mitigation measures such health declaration & daily temperature screenings, creating new working behaviors such as  social distancing; adjusting the work station layout and set ups, leveraging technology i.e. conducting virtual meetings and implementing mandatory PPE (appropriate face masks, safety vests, helmets, safety shoes, safety glasses and hand gloves), highlighting personal hygiene and more frequent cleaning and disinfection at worksites and offices.

We quickly adjusted the way we manage our worksites during lockdowns across the region. We are working closely with Indonesian local authorities and clients in establishing new safe management procedures for pandemic to ensure the safety of staff and all co-workers at our worksites. Our resilience team is actively monitoring the strict implementation of our “Workplace readiness Guide” for gradual return to work after lockdown release. This guide is based on both the World Health Organization (WHO) and Centers for Disease Control and Prevention (CDC) guidance for risk assessment and public health management, including regulations from Indonesia’s Ministry of Manpower & Transmigration and Ministry of Public Works and Housing. “

Do we still need massive mixed-use developments?

It is not just about building massive mixed-use developments. There should be a consideration between dense and compact developments. The mixed-use approach is a great idea for most developments. The next is a question of scale.

Through studies on how land is best utilised, the following aspects have to be taken into consideration: synergised infrastructure, inspiring public facilities, market positioning, social inclusions, sustainability/resilient factors and the potential for investment return. Dense developments certainly maximise capital investments into large projects of an urban nature, but at a cost.

By June 2020, the President of Republic Indonesia visited the new integrated industrial estate development of Batang Industrial Estates, Central Java, that implements the concept of a smart and sustainable industrial district. Located in a modern industrial area of 4,300 hectares, a collaboration project between PT PP (Persero) Tbk., PT Kawasan Industri Wijayakusuma (Persero), PTPN IX and Batang Regency Government), they plan to create 130,000 new job opportunities in the first phase and increase the economic impact of Central Java.

These industrial estates will also be positioned to facilitate industrial development and logistics in Central Java. Both will be expecting investments from American, Japanese and South Korean firms seeking to relocate their factories and set up manufacturing, furniture and electronics businesses in Indonesia. What we need to prepare is the policy consistency for more proactive and collaborative actions to coordinate between government agencies and private enterprises to appreciate investment potential optimally.

What does that mean for current underutilised buildings? What is the plan for them?

I believe each owner or developer will have different approaches and strategic decisions for this situation, where AECOM can be the partner consultant to solve complex challenges and build legacies for generations to come. On projects spanning transportation, buildings, water, government, energy and the environment, our teams are driven by a common purpose to deliver a better world.

In my view, we can certainly create a master plan in a developed area by repurposing underutilised buildings, not destroying them but taking advantage of any existing infrastructure. Along business districts, such as Sudirman and Gatot Subroto areas in Jakarta, for example, there are many overstocks and mostly empty office buildings of grades B and C. Those buildings can be maximised for investment by redeveloping them into mixed-use projects that include a mixture of residential, office and hotel services. This will allow people to work and stay in the same building. The government can support this by preparing a tax depreciation that could be available for residential investments for both developers and investors.

How will the construction industry help economic recovery, especially in infrastructure development projects?

Historically, infrastructure construction and related industries have created many job opportunities that these have become the key drivers of growth. Currently, there is a concern about unemployment caused by the pause in most economic activities. By kickstarting construction activities, the engine can be reignited to provide people with steady incomes, which will also have a positive ripple effect on different sectors, such as retail, leisure, tourism, commercial, residential and many more.

The construction industry also encourages knowledge transfer, particularly in complex infrastructure developments and talent building among locals. I think it would be wise to push for more infrastructure investment to put the economy back on track.

I understand that there are challenges in funding and investment, but this is where the government and public sectors can collaborate to get things off the ground in a way that benefits the nation. Players in the construction and infrastructure sectors have an obligation to find ways to fund construction projects and perhaps the government should not have to shoulder the costs indefinitely.