About the Talk
October 22, 2015 5:00 AM
Swit zerlandSwit zerland
Indonesia’s economy has slightly slowed down in the past five years because of financial instability of the archipelago, the country’ heavy equipment industry continues to thrive and develop. In the latest report by Jakarta Post, it states how Japanese manufacturers had shown biased reaction towards the Indonesian market.
Different investors from other nations have seen the potential of the country in urban growth, thus the need of infrastructure development and the demand for heavy equipment. Construction has spurred forward in the last decade as local manufacturers are also increasing in number.
Axis Capital Group, a company which sells and rents heavy capital equipment in Singapore has also built their own subsidiary in Jakarta, Indonesia in response to the growing business ventures in the country. According to its spokesperson, Michael Stanley, the archipelago remains the largest market as 4,000 units are being imported to many infrastructure projects in its major islands.
In response to the allegations of equipment fraudulence in local manufacturers, many business owners have been disappointed to see 1.2% of overall equipment number reported to have been stolen. The lack of tight security has been the main source of thievery as well as the easier getaway through different means of transportation.
Nevertheless, the fraudulent acts were not able to stop the increasing investors. The introduction of rental equipment has also paved way for many offering companies to double the profit. Businesses are also able to benefit from renting heavy equipment as it cuts the cost, maintenance and the risk of obsolesce.
It is not the same for United Tractors, though. As the nation’s largest heavy equipment provider, it surprises everyone that the company has sold fewer heavy equipment in the first eight months this year than they had last 2014. The decline of mining industry which encompasses 45% of total sales, a large fraction of market, has been the receding factor. The weakening of the coal mining industry has already been anticipated and the company has allotted $350 to $450 million for capital expenditure this year. In their reviews, about 80 percent to 90 percent of the capital expenditure will be allocated for United Tractor’s subsidiary, Pamapersada Nusantara, which is a mining contractor business. The remaining 10 percent to 20 percent will be allocated for the company’s heavy equipment.
For exporters from Indonesia, Thailand, Malaysia and Myanmar are the main destination in terms of volume while the Middle East and African countries are also an increasing market.