Construction Companies Grapple with Mounting Debts

By Editorial Team 13/02/2023
debt risk
Summary

Construction and infrastructure firms are grappling with mounting debts. According to a report by Bloomberg, four state-owned construction companies have experienced a twelve-fold increase in debt to Rp 130 trillion since 2014, with one of them, PT Waskita Karya Tbk (WSKT), facing a bond payment of Rp 2.3 trillion that matures in February.

Waskita Karya President Director Destiawan Soewardjono stated that the company is seeking long-term financing from abroad to reorganize its finances and is seeking new contracts worth Rp 26 trillion this year. “The 2023 performance target is attainable, and therefore, it is expected to be met as planned,” Destiawan said.

Industrial estate and residential property developers are facing similar financial pressures. For example, PT Kawasan Industri Jababeka Tbk (KIJA) recently completed negotiations to extend its dollar-denominated bond debt from 2023 to 2027. Meanwhile, property developers PT Lippo Karawaci Tbk (LPKR) and PT Agung Podomoro Land Tbk (APLN) are struggling with high debt due to sluggish sales and high-interest rates. An analyst with Australia & New Zealand Banking Group Ltd, Ting Meng, warned that Indonesia's property market poses the biggest risk for investors in the Asian corporate bond market.

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