All in one
Muhammad Al Azhari | July 03, 2011

Bakrieland Development has a huge land bank in the Greater Jakarta area but President Director & CEO Hiramsyah S. Thaib says that is only the beginning of the story. The provision of roads and total living environments – with possibly even a major theme park – can take Bakrieland to the top.

Bakrieland Development, the property and infrastructure company that owns the largest land bank in Indonesia, is set to convert that land bank into cash flow, its chief executive says.
Appropriately, Bakrieland CEO Hiramsyah Thaib studied architecture at the Bandung Institute of Technology, providing additional credentials that have contributed to the success of the company through the creation of total living environments. Bakrieland will continue offering the concept of integrated property areas, combining the development of a specific region with infrastructure development, he says.


”We are adopting a blue ocean strategy, which means we will seek the market in places where competition becomes irrelevant. We do our property business in a different way, we don’t only offer consumers the property, but we build infrastructure to ease access. That is our strength,” he says in an interview with GlobeAsia.
Bakrieland, which owns around 14,000 hectares of land bank, is expected to announce a number of big corporate actions that are being awaited by the market.

They include development progress on a satellite city in Jonggol, West Java; an initial public offering for its toll road business unit; and updates on potentially billions of dollars to be invested in a theme park in Sukabumi, also in West Java.
“On Jonggol, we are in progress toward finalizing the master plan. We expect we can start launching some of our units in the third quarter of this year,” he says.

In Jonggol alone, Bakrieland owns a total of 12,500 hectares of land in the area, equivalent to a fifth of the total size of Jakarta. 
It will use some of the Rp3.2 trillion ($358 million) it gained in a rights issue in July last year to develop the area as a satellite city, including prime residential area for middle-up consumers. The company will also construct road access from Jakarta, connecting Jonggol to the Ciawi-Sukabumi toll road being developed by its business unit Bakrie Toll Road. 

Hiramsyah says he expects an IPO by Bakrie Toll Road in the fourth quarter of this year or at the latest in the first quarter of 2012 to raise around Rp1-1.5 trillion in fresh funds to finance expansion. “Underwriters will be appointed in the third quarter; we are currently studying some names. We have met some securities companies,” Hiramsyah says, adding that strong 50% growth in new car sales last year has drawn investors’ interest to the company’s shares. “When you see car sales increase, toll road operators are among the first that enjoy the benefit,” he states.

Adding up kilometers Bakrie Toll Road’s first project at Kanci-Pejagan - it connects Kanci in Cirebon, West Java and Pejagan in Brebes in Central Java - has been in operations since early 2010. Both the Ciawi-Sukabumi section and the Pejagan–Pemalang section in Central Java are scheduled for completion by 2013. 
“Ciawi-Sukabumi is an extension of the Jagorawi toll road, well-known as one of the busiest toll roads. The traffic that will be generated from this toll road (extension) is promising,” Hiramsyah says.


There is also plenty of buzz about Bakrieland’s theme park plan at Sukabumi. A Reuters report in November, citing a source with knowledge of the plan, said the developer was in talks with Walt Disney Company to build a $1 billion theme park there. 
Hiramsyah declined to comment on the report, but notes that Bakrieland as an integrated property and infrastructure project developer is planning on expanding its offerings of township concepts to customers that will also provide entertainment destination areas, including some sort of theme park.

“With improving income per capita of Indonesians, the need for entertainment is growing . . . Just look, now it’s the holidays and Bandung and Puncak are crowded,” he says, referring to two major holiday destinations for Greater Jakarta residents. “It shows that Indonesians need new places to refresh themselves. Our projects have the potential to be developed to accommodate this need.” 


Hiramsyah says he expects 2011 net profit at Bakrieland to grow in a relatively stable manner on the back of the strong domestic economy. The completion of some projects last year and earlier this year will have a positive effect in creating new revenue, he is reported to have stated in another recent interview.
He is penciling in up to a 30% increase in net profit from last year, when Bakrieland booked net profit of Rp178.7 billion, up 35.1% from 2009, with strong revenue contribution from middle- to middle-up residential business in prime city locations.


“I see lending rates will be relatively stable this year. On the other hand, Indonesia’s economy will speed up, people’s purchasing power will follow,” he states.
Even though the central bank may have to hike its key interest rate, it will not rise more than 50 basis points, he believes. The steady rate level at Bank Indonesia will provide scope for Indonesian lenders to maintain the mortgage interest rate, which currently hovers around 9% to 11%. 


Last year, assets with recurring income such as toll roads contributed to 35.7% of total revenue and, as Bakrieland draws more customers, revenue that will be generated from such assets is seen to increase.
Recently completed projects are Epicentrum Walk (March 2010) and Epicentrum Walk Office Suites (Agustus 2010), located in the company’s superblock Rasuna Epicentrum development. On completion, the superblock will consist of integrated residential apartments and condominiums, malls, office and entertainment centers, all to be built on 53.5 hectares of land in Kuningan, on the eastern edge of the Jakarta central business district. 


The super-project needs total investment of up to Rp20 trillion for completion. It started in 2006 and is set to be completed in seven years.
Bakrieland also completed the Bakrie Tower office building  in May 2010, also in the Kuningan area of the CBD, as well as two hotel and resort projects, Aston Bogor Hotel and Resort (December 2010) and Pullman Bali Legian Nirwana (February 2011).

City Property, a business unit that takes care of property businesses in Jakarta’s CBD, is still seen as the biggest contributor to company profits.
Hiramsyah, now 49 and a veteran of 14 years with Bakrie Group, believes he can still take the company to a higher level. He says he learned a lot about revitalizing business from Aburizal Bakrie and went on to prove his capabilities when he salvaged the hotel and resort operation of Nirwana Bali Resort in Bali in 2001.

As President Director & CEO at PT Bali Nirwana Resort, Hiramsyah restructured the company’s ailing finances in the wake of the economic crisis in 1998, with the asset parked under the care of the Indonesia Banking Restructuring Agency. Aburizal Bakrie’s businesses had been hit hard by the financial crisis and companies including Bali Nirwana Resort were burdened with huge debts, Hiramsyah recalls. ”I had to do total business restructuring, all the business model, business processes, organization, etc. to revive a nearly dead company.

But now, the company has become one of Bakrieland’s flagships, it has received many awards, and its golf course is one of the best in Asia.” 
Before joining Bakrie Group, Hiramsyah had been president director and then president commissioner of the state pension bank, Bank Tabungan Pensiunan Nasional, and before that a senior business manager in commercial banking in the regions for Bank Niaga (now Bank CIMB Niaga).
With the economy now ramping up, Hiramsyah says the story has a long way to go. The completion of Bakrieland’s big projects will take the company into a higher league. “Once our integrated plan becomes reality, I see this company becoming the biggest property company by assets, size and market capitalization at the Indonesia Stock Exchange.”  GA 


 

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