Wika expects to land a big chunk of the construction projects for Indonesia's new capital in East Kalimantan. (Antara Photo/Risky Andrianto)

Wika Eyes New Indonesian Capital as Launchpad for Expansion


SEPTEMBER 04, 2019

Jakarta. State-controlled Wijaya Karya, one of Indonesia's largest listed construction companies, will target investment in leading sectors including energy, property and infrastructure during the development of the country's new capital in East Kalimantan.

The government announced the plan to move the capital from Jakarta to a new city to be built in North Penajam Paser and Kutai Kartanegara districts in East Kalimantan last month. 

According to the plan, the government expected Wika to bear two-thirds of the $33 billion development cost. Construction is expected to start in 2021. 

"Wika invests around Rp 20 trillion ($1.4 billion) in the energy, property and infrastructure sectors this year. By the time construction starts in the new capital, our investment would double to Rp 40 trillion. Wika will definitely have a hand in those leading sectors," Wika's managing director Wika Tumiyana said on Tuesday.

He said Wika wants to build a power plant, roads and housing projects in the new capital. 

"A total of 34 ministries will move their headquarters to the new capital. Each of them has at least 10,000 employees. That's a lot of houses waiting to be built," Tuminyana said.

"We will have two roles in the development: as a contractor and as an [investor] under the public-private partnership scheme," Tumiyana said. 

According to him, Wika has a strong enough balance sheet to leverage financing for the public-private partnership scheme.

Wika's debt to equity ratio was recorded at 0.8 in the second quarter, one of the lowest among local construction companies.

Tumiyana said by the time the company completes construction of the new capital in 2023, it would have up to Rp 62 trillion to spend on new investments.

Tumiyana is optimistic Wika would be able to secure a big chunk of the construction projects for the new capital city, considering the company's extensive portfolio.

Wika is part of the Indo-Chinese consortium that has been building one of President Joko "Jokowi" Widodo's pet projects, the Jakarta-Bandung Fast Train. 

Today, road constructions account for 25 percent of Wika's revenue. 

"The rest comes from building real estates and power plants, from the property business and other aspects of the construction industry. Wika has everything it takes to help build the new Indonesian capital," Tumiyana said.

Wika also has a concrete plant with a current capacity of 3.8 million tons per year. Production at the plant is expected to pick up to 4 million tons per year by the end of 2019.

"Meanwhile, our current steel production capacity is at 35,000 tons per year. We'll increase it to 100,000 tons per year by building a new factory in Subang [West Java]," Tumiyana said.

According to him, all of Wika's factories have been ramping up their production capacity due to rising demand.

"Refineries are being built everywhere and they need a huge amount of steel. The government is also building more power plants and high-voltage electrical grid, creating more demand for steel," Tumiyana said.