The government now has a mechanism through which they are able to acquire land even if its owner does not want to sell. With signs that adequate infrastructure will soon be put in place; the property sector is poised to grow
Mr Anthony Putihrai, President Director
Tamara Land is a leading property developer in Indonesia with a highly diverse portfolio of projects in residential, commercial as well as industrial properties. What can you tell us about your company’s background?
My father founded this company, which initially was not involved in the property sector. He first went into the banking business in 1968 and from this foundation grew the company significantly until the 1998 Asian financial crisis hit. Our banking operations eventually had to be closed in 1999 and were subsequently taken over by the government. Fortunately, Indonesia’s economy recovered rather quickly and we were able to rebound by moving into new industries. I myself started a coal-mining business in 2000 when coal prices were still very low. Such was the profitability of this entity that by 2010, we were able to pay the full amount of our family debt to the government.
From there, we went back to investing in an array of property sites because we saw great potential in the Indonesian property sector. It proved to be a good decision, given the recent challenges faced by mining companies following on from the government’s decision to prohibit the export of raw materials.
In terms of the group’s expertise, you are mainly involved in the property and mining sectors. What can you tell us about this and what are your strategies going forward?
With regards to the mining sector, we are not only exploring coal, but we are also involved in the nickel, tin as well as in the iron ore industries. Unfortunately, due to government regulations, we are forbidden from exporting nickel and iron ore. As a result, we have stopped the production of these commodities. We are still able to export coal and tin because we have our own smelters.
Property remains our biggest line of business. It is our goal to place among the top 5 developers for the middle class segment. We see this as an opportunity because there are still few major players in this particular domain out there. In terms of strategy, our philosophy is to avoid high-gearing and we are always inclined to minimize borrowing in pursuing projects.
What can you tell us about your outlook for the property sector in Indonesia in the short and medium term?
In the short term, I expect that the property sector will experience slow growth following on from an upcoming market correction. The price of premium properties will go down slightly, but this will depend on their location. A specific example would be our buildings in the Sudirman area, for which the price will stay more or less constant and there will be no impact. Outside of this area, market corrections will likely take place, as evidenced by the fact that many property owners have started selling below their previous asking price. In the medium term, however, my outlook is more positive as I strongly believe that Indonesians will remain highly interested in investing in property.
In which parts of Indonesia do you see the most potential for property development going forward?
In my opinion, the 5 major cities in Indonesia will continue to present the most interesting opportunities.
As such, our company is keen to explore properties in Surabaya, Medan and Jakarta. Bekasi and Bogor also have great potential because as property prices in Jakarta go up and people cannot afford its houses and apartments, they will choose to move to the surrounding areas. This will naturally result in a hike to property prices and we are already starting to see signs of this taking place. If you go to Bumi Serpong Damai or Gading Serpong, a square meter currently sells for Rp 20-25 million. 4 years ago it was Rp 4 million. In addition to this, we have a project with Sahid Group to build a hotel and villas in Lombok. The rendering has been completed and hopefully we can launch it early next year. In Cepu, we are building a pipeline to be completed by 2016.
Much is expected of the new government under Joko Widodo to improve upon the business climate in Indonesia. In your view, what should the new administration prioritize in spurring the development of the property sector in Indonesia?
We have been waiting for better laws and regulations. Having said that, I believe that there have already been notable improvements in the Joko Widodo era, especially regarding infrastructure. The government now has a mechanism through which they are able to acquire land even if its owner does not want to sell. With signs that adequate infrastructure will soon be put in place; the property sector is poised to grow. We have seen a similar pattern in countries such as China, which carried out massive infrastructure development such as the construction of 6-lane highways and as a result created new jobs and ensured greater ease of doing business, which in turn boosted the property sector.
How is your company positioned towards working with international investors and foreign partners?
We definitely welcome this type of cooperation, as creating partnerships with international entities is a good strategy for us. Our company has experience in this regard, having successfully partnered with a Taiwanese company for our warehouse business in Cakung. At present, we are most interested in working with partners able to support us in establishing a wider network through which we can offer our construction projects.
Technology and know-how are more needed for our mining ventures. Speaking about coal, we are interested in partners with expertise in underground mining. This is because most coal-mining operations in Indonesia employ the open pit method. Foreign investment for nickel is also welcome as the investment needed is considerable.
As a final message, what would you like our readers to remember about Indonesia?
Indonesian people have a warm and friendly nature. As such, I am confident that people from around the world will want to come to Indonesia not only to invest but to experience everything the country has to offer.