Our infrastructure analyst Hadi Susilo highlighted that, despite the general skepticism, there actually is progress in Indonesian infrastructure.
There are some construction progress: 24km built last year, 66km of toll roads are under construction, and 620km to follow in the next 24 months.
While some physical construction has been achieved, more importantly the blueprint has been set for faster progress going forward.
Construction companies have been decimated in term of market cap and too illiquid to matter for many investors. The plays in the infrastructure area are Jasa Marga (JSMR IJ) and Indocement (INTP IJ).
Key points from the report:
· Indonesia has 690km of toll-roads of which 24km were built last year.
· Currently 66km are under construction and 620km will follow in 2009-2010.
· The business climate for toll roads has been improving since an independent regulatory board (BPJT) was established in 2005.
· A Ministerial Decree was established in July 2008 to regulate Land Capping and an additional Rp5.2tn budgeted over 2008-2010.
· The regional governments are actively participating in the toll road investment through state owned-companies.
· Further, BPJT has proposed for the Central Govt to build 3 toll road sections which economically needed, but commercially not feasible.
· The Government aims to complete 1,000km of new toll-roads by 2013 (up 166% from current) with Rp88.5tn investment cost.
· Companies set to benefit: Jasa Marga – BUY; Indocement – BUY and Semen Gresik – OPF
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