👟 Walk the Talk: Indonesian State Builders
Acrostics Asia was more than half a year ahead on the coverage of Indonesian state-owned builders.
Indonesia’s infrastructure push under its former government has saddled state-owned builders including Wijaya Karya and Waskita Karya with mounting debt.
More than half a year before the official announcements, Acrostics Asia flagged that these state-owned enterprises (SOEs) must go for another round of restructuring as President Prabowo Subianto slashed the construction budget.
Key Timeline
The construction of the Jakarta-Bandung high-speed rail – known as Whoosh – carried a roughly USD 7 billion price tag that may keep ballooning.
Acrostics Asia flagged that Wijaya Karya and Waskita Karya were headed for a restructuring redux due to the drastic budget cuts.
Indonesian state-owned banks already did their national service by agreeing to roll over loans to their construction peers.
Acrostics Asia wrote that these lenders were waiting for orders from their shareholder, Danantara, on how to deal with the non-performing loans.
Danantara’s Chief Operating Officer Dony Oskaria reportedly said that Indonesia is exploring how the joint venture operating Whoosh – Kereta Cepat Indonesia China (KCIC) – can become “self-sustaining”.
Danantara is weighing the options of increasing equity in the operating company or handing over the infrastructure to the Indonesian government.
Acrostics Asia wrote that the typical Indonesian SOE workaround of rolling over loans or converting debt into equity is unlikely to fly with the Chinese.
Danantara has to cough up some hard cash, but there’s a risk of a crowding out effect as some SOEs have their own financing needs.
President Prabowo Subianto reportedly said that KCIC will receive support from the state coffers, over-ruling Finance Minister Purbaya Yudhi Sadewa who previously said that the Whoosh operator was Danantara’s responsibility.
Acrostics Asia wrote that state-linked entities across India, Indonesia and China are caught between performing their national duty and reining in leverage.
Wijaya Karya President Director Agung Budi Waskito said the company is set to restructure its debt again in 2026 due to a decline in revenue, confirming Acrostics Asia’s analysis seven months earlier.
Acrostics Asia wrote that four private banks received a steep haircut in state-owned steel maker Krakatau Steel’s restructuring, potentially serving as a warning for Wijaya Karya’s own lenders.
Acrostics Asia wrote that the extent of Indonesia’s construction slowdown was laid bare in Wijaya Karya’s latest earnings presentation.
State-owned builders including Wijaya Karya and Waskita Karya are preparing for a merger in the second half of 2026.