After years of being in the doldrums in the wake of the 1997/1998 monetary crisis, Indonesia’s heavy equipment industry began to revive in 2003. In 2004, sales were triggered mainly by the mining industry boom. The strong revival of heavy equipment business is also attributed to expanding agribusiness and forestry sectors. Furthermore, the construction industry began to grow in 2004. Meanwhile, the government has pursued infrastructure projects which required large numbers of heavy equipment.
In the past eight years, sales of heavy equipment reached the highest level in 2007 with total sales of 7,506 units. The positive economic outlook for Indonesia in 2008 has created a mood of optimism among suppliers of heavy equipment. Agriculture, forestry, construction and mining sectors are expected to remain attractive markets for heavy equipment, driven by the expansion of forestry and agricultural plantations.
Mining, agribusiness, construction, and forestry sectors are the main factors that drive the market growth. Driven by global demand of commodities with high prices, it is believe that the upcoming demand for heavy equipment will continue to stay strong.
In mining sector, the increase demands for heavy equipment primarily comes from comes from mining commodities such as coal and metal mineral that includes nickel, tin, iron ore and gold.
Demand for heavy equipment has increased in the agribusiness sector, particularly palm oil plantations. Crude Palm Oil (CPO) is growing in demand in both domestic and international markets. Indonesia and Malaysia are by far the world’s largest producers of palm oil, together accounting for 85.7% of the world’s total production. The rapid increase of price of crude palm oil (CPO) to $1,176 in June 2008 has encourage companies to expand and open new plantation areas
The construction sector is one of the highest priorities for Indonesia’s government. The government has planned large-scale infrastructure projects in five priority sectors including transportation, gas pipelines, electric power, water supply resources, and telecommunications. The projects, which span the country for the 2005-2009 period, are designed to attract foreign investment and boost annual economic growth to over 6 percent.
In the forestry sector, pulp producers are urged to reduce the exploitation of natural forests and focus their activities in the industrial forests and expansion of acacia plantations, resulted an increase sales of forestry equipment.
By Kalung Riang