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Letter to Shareholders
Dear Fellow Shareholders,
Based as we are in Singapore and the Riau Islands, we partner with, and support and benefit from being both Singaporean and Indonesian. When our projects started 30 years ago it was part of the Singapore – Johor Bahru – Riau Islands triangle. The partners, and the world, have changed a lot in the intervening years. However, the fundamental logic of cooperation among the three neighbors remains, and now as more mature partners, we are better positioned to integrate our business environments.
Indonesia continues to be the largest economy in ASEAN comprising around 35% of its total economic output. Indonesia's GDP grew by slightly over 5% in 2024 and now ranks 7th largest in the world on a PPP basis, and 16th largest on a nominal basis. Our businesses continue to benefit from this macro-economic environment as well as our long-term competitive advantages of strategic location, partnerships, and strong asset base.
Indonesia's GDP growth was tempered by the slowing of resources/commodities demand and the reduction of domestic business investment during an election year. The elections progressed smoothly and uneventfully, and the pre-handover political compromising has led to a strong majority government that could be effective and efficient. While sluggish global economic growth has affected some export driven demand, we have seen good domestic consumption growth, with bright spots in the accommodation/food service, and the transportation sectors (each growing over 8.5%) and the ICT sector (growing over 7.5%) (GMV of digital economy grew 13% to over $90 billion). Inflation has moderated to around 2.5% for 2024 (falling below 2% for 4Q 2024). Unemployment fell to 4.9% in 3Q 2024 from 5.3% in 3Q 2023.
President Prabowo is targeting an 8% GDP growth rate by 2029 which implies a stable business friendly environment. He is already courting significant increases in FDI, and economists advise that to achieve a sustainable 8% growth rate, the manufacturing sector needs to grow from 19% to perhaps 25% to 30% of GDP to move the economy up the value chain.
Our industrial parks continue to benefit from the geographic diversification of manufacturing away from China. In 2024 we handed over to tenants 12 newly built factories in Batam totaling 116,000 m2. During the 5 year period ending December 2024, we have increased our lettable factory area from 549,000 m2 to over 716,000 m2, while maintaining a 100% occupancy rate in Batam. We are actively optimizing our Batam industrial park to cater for further expansion – and we still have the large landbank at Bintan industrial estate where prospective tenants can consider large 100 ha plus campus style facilities. The team has done a superb job of planning, marketing, and executing the expansion and we are extremely proud of them.
Our utilities business has benefitted from the increase in activity in the industrial parks, although the full flow through effect of up to 20% to 25% increase in turnover may only manifest over the next few years. Contributions from the resorts have also increased as new hotels open in 2024 and 2025, and as additional tourists visit Bintan. In addition, the less volatile energy markets have allowed us to optimize our electricity production costs, and we should also see additional benefits over the next few years as our PV projects stabilize. We will continue to work to build our infrastructure to serve the increasing demands of our clients, such as the over 500 km of fiber optic cable we have installed and manage.
Our property development business had a few wins in 2024, though several projects are delayed into 2025. Beyond our resort development, commercial and other infrastructure projects, we are also moving forward with master planning our 800 ha data center park and have started initial earthworks. Our team continues to do an excellent job in protecting and maintaining our assets in good condition ready for implementation of the new projects. Significantly, the team also did a good job in smoothly renewing over 5,000 ha of our HGB land certificates, extending validity to Year 2044 to 2046. We expect to complete the lease extension of our entire land bank by the end of 2025.
Our resort operation business had a busy year as the room key count in Bintan Resorts increased by 676 rooms under 3 international operators – Sheraton Four Points, Indigo, and Holiday Inn opened – albeit under soft launch for some. We expect the full impact to be recorded in 2025. In addition, the Movenpick hotel (477 keys) which has been under renovation for the last 3 years, will reopen in 2025. In 2024 our ferries ran at an overall 56% load factor (including 53% for the Emerald Class premium product). Our current fleet capacity is only 870 seats, so with the significant increase in hotel rooms we are adding 3 new, more fuel-efficient ferries over the next 3 years taking our fleet capacity to 1,479.
In 2024, our EBITDA was S$45.7 million, a decrease from S$68.0 million in 2023. This decline was primarily due to a foreign exchange revaluation loss of S$22.9 million and a S$6.3 million drop in profit contribution from PT IMAS. PT IMAS had a slower year as high interest rates and political uncertainty led consumers to delay big ticket purchases like automobiles. In addition, the heavy equipment business weakened significantly in the second half of the year. However, PT IMAS's focus on EV's should yield results in 2025, since the Indonesian government needs EV adoption to accelerate to reduce the IDR 500 trillion (S$41 billion) it spends on fuel subsidies annually. With regards to our other associate companies, BOMC contributed around S$0.5 million to our results. While it had a relatively quiet year, we look forward to better results in 2025. We also made a S$16 million investment to acquire 40% of Regent, and subsequently Regent took over Batamindo Shipping and Warehousing Pte Ltd. This investment strengthens our ability to deliver a seamless logistics solution for our manufacturing tenants looking to send goods from Batam and Bintan through Singapore to the rest of the world. And our participation in PMSE – the solar PV project in Bulan Island continues to move forward with both governments supportive. We are well into design and planning including the underwater cable routing to Singapore. It is a landmark project, and we hope to be able to give the markets more information later in 2025.
We believe that our landbank assets, our industrial parks and utilities providing first world level of infrastructure, and our close geographical proximity to and relationship with Singapore and its legal, financial, R&D, and logistics infrastructure, we are positioned to leverage on our region's macro-economic growth story. We also believe that the Singapore – Johor Bahru – Riau Islands triangle will continue to develop and strengthen its symbiotic ties by leveraging each partner's competitive advantages. We look forward to continuing our exciting journey together with you.
Sincerely,
| Mr Lim Chee San | Mr Eugene Cho Park |
| Non-Executive Chairman and Independent Director | Executive Director and Chief Executive Officer |