Eddy Sindoro, Chairman, Paramount Enterprise: Interview

Interview: Eddy Sindoro

What are the priorities for emerging townships and where is government assistance needed?

EDDY SINDORO: Township developers have taken matters into their own hands with regard to the construction of hard infrastructure, public facilities infrastructure and management software infrastructure. However, for most, there is a primary focus on improving public transport via the construction of mass rapid transit (MRT) and monorail systems, such as those which are finally breaking ground in Jakarta.

This is going to become particularly relevant for new townships that are being built from scratch where such a transport system can be integrated into site design rather than becoming an afterthought as is currently happening in the capital.

For instance, the city of Melbourne has incredible infrastructure, and so represents a model that Indonesia ought to follow. However, in order to achieve this, we need the government to play a role in providing adequate infrastructure, not only for smallscale MRT systems but also more generally. This will have a knock-on effect in reducing the debilitating costs of logistics. Indeed, I would say that transport is in fact the most important priority for the sector, and while it may be long overdue, it is not too late.

As prices in the real estate sector continue to rise sharply what does this indicate? Is this increase becoming unsustainable?

SINDORO: I am not overly concerned about price increases as the strong demand for property has a balancing effect. Current prices in Jakarta are around onetenth of the prices in Singapore and will continue to rise in the coming years.

Jakarta’s GDP per capita is between $9000 and 12,000, but as low as $4000 in regional areas, whereas it is more than $60,000 in Singapore. Therefore, our priority should be about how quickly we are able to grow, having the right products at the appropriate time and ensuring that homes are built to support greater social development.

How would you evaluate the foremost strengths and weaknesses of the Indonesian economy?

SINDORO: An important factor to note about Indonesia is that while there are prosperous cities like Jakarta and Surabaya, there are also far less affluent cities such as Kupang, the capital of East Nusa Tenggara province, near East Timor. These cities are not only poor but also lie in areas without natural resources. Kupang is a very interesting case in terms of identifying rapid economic growth outside of major Indonesian cities, as consumer demand for high quality products and services has seen a swift upward trend in recent years. Many other cities such as Samarinda, Banjarmasin, Manado and so many others are also seeing significant economic growth. Such strengths are also apparent in the real estate sector where township developers are experiencing strong demand for housing.

To what extent are opportunities for foreign entities shrinking with the growing number of well capitalised Indonesian developers?

SINDORO: While there are many well capitalised Indonesian developers building quality structures, the pie is so big that there are still plenty of opportunities for foreign entities. While domestic companies may have an advantage in terms of acquiring clean land due to their local expertise, foreign firms have maintained an edge in terms of funding and in utilising technology to create efficient structures. Indonesian companies have plenty to learn from their foreign counterparts, particularly when it comes to implementing green building policies. However, for such ambitious initiatives to be successful within the Indonesian market, they must be economically viable. Training and awareness-building programmes, in addition to government schemes, must be initiated properly, or progress will be slow. Such methods are particularly key when we are still far behind in terms of housing supply. Thus, we must make it as easy as possible to adopt green policies, whilst at the same time maintaining a suitable rate of construction.