New Tech Offers Innovative Solutions to Indonesia’s Construction Industry

Indonesia construction companies, like their global peers, are beginning to adapt to new challenges brought on by climate change and to innovate how they conduct business. (Antara Photo/Yudhi Mahatma)

By : Dion Bisara | on 5:33 AM April 25, 2017
Category : Business, Corporate News, Featured

Jakarta. Indonesia construction companies, like their global peers, are beginning to adapt to new challenges brought on by climate change and to innovate how they conduct business.

Nearly 30 percent of all greenhouse gas emissions around the world originate from buildings, according to a recent report from Boston Consulting Group (BCG), forcing companies to rethink effective, climate-friendly structure designs.

Those concerns have been exacerbated by increased urban populations – who move to cities at rates of 200,000 per day – who would need affordable housing as well as social, transportation and utility infrastructure, the report said.

In Indonesia, the World Bank estimated that 68 percent of the country's population will be living in cities by 2025. That number is among the fastest urbanization rates in the world, rendering conventional construction techniques incapable of keeping up with demand.

"Globally, the construction business has been lagging in terms of innovation. Over the last 50 years, they haven't significantly innovated at all," Edwin Utama, partner and managing director at BCG, said in a recent interview with the Jakarta Globe.

However, the BCG report, titled "Shaping the Future of Construction: Inspiring Innovators Redefine the Industry," pointed out that significant improvements are already within reach.

Advanced technologies – from 3-D printing to Building Information Modelling (BIM) and prefabricated construction materials – have begun to revolutionize how construction companies conduct business around the globe.

Although many innovative solutions are already being applied on small scales in a few countries, the prospect of improved building quality at cheaper costs has yet to make its mark on the industry.

The report highlights Dubai's renowned skyscraper Burj Khalifa – the world's tallest building  took only seven years to complete, in large part due to careful logistical planning, close collaboration with experts, suppliers and regulators, extensive use of prefabrication materials and other recent innovative techniques.

At the lower end of the spectrum, the report showcased a new system developed by South Africa's Moladi, which utilizes reusable plastic molds to build houses at half the price of conventional methods and keeps environmental impacts to a minimum by sourcing local materials.

"The key take-away here is that it's not because of a lack of ideas. The innovations are already there," Edwin said. He added that Indonesian companies can benefit most from implementing prefabrication construction methods and BIM to build faster and cheaper.

"What is missing is how we adapt to that and how we create organizations that are willing to be more innovative," he said.

Taufik Hidayat, president director of local developer PP Properti, recognizes the need for construction companies to quickly adopt new technological innovations to meet rising construction demands.

In the housing sector alone, Indonesia currently faces a backlog of 13.5 million residential units, according to the Ministry of Public Works and Housing. That number is likely to increase as demand for new units soars every year due to rising levels of urbanization and population growth.

"We have to reap the benefits of using some of those technologies, but we still need to improve it to suit our business processes. That's why we set up a special unit for technology development," Taufik said.

Ultimately, the government holds the key to institutionalizing innovation in the country's construction sector, BCG's Edwin said. Construction companies in Indonesia, as in other emerging economies, often find themselves in dominant positions with high demand and few competitors that they can often get by with only delivering basic requirements.

"[The country] needs support from the government to make it happen […] without incentives, companies will most likely struggle to adopt," Edwin said.

That support, Edwin added, could come by means financial incentives or pass new outcome-based building codes to allow space for construction companies to test novel approaches without having to worry about breaking the law.

On the other hand, governments also need to address a striking skill gap in Indonesia. High-skilled workers are often required to operate new technologies  though Indonesia currently has a shortage of those currently qualified.

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