Chinese contractors have been increasingly aggressive in eyeing projects in Indonesia since after the application of the Asean-China Free Trade Agreement (ACFTA) there have been 127 Chinese contractors working on several projects in Indonesia.
Soeharsojo, Chairperson of the Indonesian Constructors Association (Gapensi), explained most of Chinese contractors worked on power plant projects. In West Java, for example, one of the projects they were currently working on is the Jatigede Dam.
In contrast, only six domestic contractors, five of which are state-owned enterprises (SOEs), have been working on projects overseas so far, namely projects in the Middle East.
"The invasion of contractors from China is followed by the entry of building materials from the country, which not all of them are of good quality," he told last week.
He added the national building material in average had three quality grades (from 1 to 3), while Chinese products had seven quality grades, meaning most of Chinese raw materials were of lower quality compared to local products.
According to Soeharsojo, the government had to tighten the application of the Indonesia National Standard to imported building material products to prevent the consumers from being injured.
He also hoped the government could endorse the creation of banks focusing on the construction sector since more than 90% of the national construction companies were small and medium enterprises. "Around 80%-85% of them are of small scale, meaning they only work on projects worth less than IDR1 billion, while around 11%-14% are of medium scale or working on projects worth IDR1 billion-IDR10 billion. So, only 1% of them work on projects worth IDR10 billion and more."
The small- and medium-scale construction companies, he continued, usually faced capital problems, making the presence of banks focusing on the construction sector serve as a solution.
Soeharsojo also hoped the government could improve the tender system, especially in making criteria for the tender winner, so that the selection of the winner should not only be based on the lowest value offered by the contractor.
The Gapensi, he added, supported the plan of the Provincial Government of West Java to issue a governor regulation regulating that tender winners should enclose bids worth at least 80% of the project value.
"We should maintain the project quality. If a limit is imposed, the contractors can compete positively and the government will have the legal rules," he asserted. (Bisnis/k37)
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