Report of the Board of Commissioners

Dear Shareholders and Stakeholders,

The Board of Commissioners regards 2022 as a year of recovery momentum from the impact of the Covid-19 pandemic, especially in Indonesia. Therefore, we would like to extend our praise and gratitude to the Almighty God for His mercy and blessings, PT Waskita Karya (Persero) Tbk managed to overcome challenges and seize opportunities in 2022 with good performance.

We report that the Board of Commissioners has carried out the function of supervising and providing advice on the management of Waskita by the Board of Directors and related staff throughout 2022. In addition, the Board of Commissioners with the support of the Committees has carried out supervisory on audit, risk management, governance implementation, and fulfillment of Waskita’s compliance with laws and regulations.

For all the implementation of such functions, we. on behalf of the Board of Commissioners would like to present a report on supervision and advice provision on the management of Waskita in 2022. This report covers discussions on the Board of Directors performance assessment, supervision of the implementation of policies and strategies, and supervision of the implementation of Good Corporate Governance (GCG) at Waskita, as follows.

... Read MoreShow Less

Economic and Industry Overview

General conditions of the 2022 world economy growth rate can be seen based on the Gross Domestic Product (GDP) which is lower than the realization in 2021. Referring to the Global Economic Prospects released by the World Bank in January 2023, the world economy for 2022 is estimated to grow by 2.9%, a lower growth rate compared to actual growth in 2022 of 5.9%. Advanced economies are estimated to grow at 2.9%, lower than the realization in 2022 of 5.3%, while developing economies are estimated to grow 3.4%, or lower than the realization in 2022 of 6.7%.

Such economic growth is influenced by a number of matters, such as the declining world trade and increasing prices of a number of commodities compared to 2021. Referring to the same report, the level of world trade is estimated to grow by 4.0%, or lower than the realization in 2021 of 10.6%. The energy price index is estimated at 151.7%, higher than the 2021 level of 95.4%. Meanwhile, the world non-energy commodity price index for 2022 was at the level of 123.7%, or higher than the level in 2021 of 112.0%.

Amidst this situation, the Indonesian economy was capable of realizing strong growth in line with strong fiscal and monetary policies and maintaining levels of people purchasing power. According to the Statistics Indonesia (BPS) report in February 2023, Indonesia’s economy in 2022 grew by 5.31% or higher than growth in 2021 of 3.70%. This figure was influenced by a number of fiscal and monetary policies issued to support economic conditions in 2022, including the provision of social security, increase in the realization of energy subsidies, and increase in the BI 7-Day Repo Rate.

Referring to BPS data, Indonesia’s construction industry for 2022 experienced lower growth than 2021. This can be seen, among others, through the growth in contribution to GDP, with a percentage of 2.01% or lower than in 2021 of 2.81%. In addition, the tight industrial situation can also be seen through the number of construction companies which decreased by 3.13%, from 203,403 to 197,030 in 2022. Factors influencing this situation include the non-optimum operation of a number of projects and the impact of the world economic after the Russo-Ukrainian conflict.

However, amidst the industrial situation, the Government of Indonesia has consistently provided support for the continuation of a number of infrastructure projects in Indonesia. This is reflected, among others, through the allocation of the infrastructure budget which remains large, at Rp373.1 trillion, with the realization of State Equity Participation (PMN) of Rp38,479 billion. In addition, during 2022, the Government of Indonesia has also realized infrastructure project financing through Sharia Government Securities (SBSB) for 12 (twelve) Ministries/Institutions with a financing value of Rp2954 trillion in a total of 880 infrastructure projects, including roads and bridges, HC infrastructure, and transportation.

... Read MoreShow Less

Board of Directors Performance Assessment

During 2022, the Board of Commissioners reports that the Board of Directors and the related staff have implemented a number of strategies in accordance with the achievement of targets set, in the RKAP and RJPP, in line with the implementation of business transformation of all 8 streams of financial restructuring programs. The Board of Commissioners regards that the Board of Directors has carried out the necessary strategic efforts to strengthen Waskita’s performance, as a long-term effort to maintain business growth and provide sustainable contributions for all stakeholders.

The Board of Commissioners considers that the Board of Directors has carried out optimal management of Waskita in 2022. Fundamentally, the Board of Directors has carried out all duties and responsibilities in accordance with the Company’s Articles of Association, Board Manual, and applicable laws and regulations. The optimal performance of the Board of Directors for 2022, among others, is reflected through the fulfillment of a number of targets contained in the 2022 RKAP, which showed positive results. Furthermore, the Board of Commissioners considers that the Board of Directors has managed to meet the targets in the Key Performance Indicators (KPI), according to the Minister of SOEs Regulation No. PER-11/MBU/11/2020.

In general, the Board of Commissioners’ assessment on the performance of the Board of Directors is based on Waskita’s performance achievements, both in the form of operational and financial performance. In terms of operational performance, the Board of Commissioners considers that Waskita has recorded positive performance as seen from the acquisition of 38 tenders out of a total of 204 tenders that were attended, with a total project value of Rp15.51 trillion. For this achievement, the Board of Commissioners considers that the Board of Directors has been able to maintain Waskita’s position in the industry with a percentage level of competitiveness of 31.22%. Then, in terms of financial performance, Waskita posted revenues of Rp15.30 trillion, an increase of 25.19% compared to 2021 at Rp12.22 trillion, along with the realization of cost of revenue at Rp13.85 trillion or controlled with a percentage of 93.52% compared to the 2022 RKAP target.

Regarding the realization of revenues and cost of revenues in 2022, the Board of Commissioners considers that the Board of Directors was able to maintain Waskita’s profitability by generating a gross profit of Rp1.86 trillion, or a decrease of 23.66% compared to 2021 and posted a profit (loss) for the year at Rp(1.67) trillion, a decrease of 9.03% compared to the acquisition in 2021.

The Board of Commissioners expresses its appreciation to the Board of Directors and related staff for Waskita’s operational achievements as of 2022, as evidenced by awards and certifications received in the year. Awards and certifications obtained by Waskita in 2022 include the 2022 SOE Award in the category of Superior Talent Development, the 2022 TJSL & CSR Four Star Award, the Economic Pillar & Environmental Pillar Category, ISO 45001:2018 Certification for Health and Safety Management System (OHS), to Letter of Conformance ISO 31000:2018.

For the coming years, the Board of Commissioners is aware of the challenges and risks in the economic and industrial situation that may impact Waskita’s performance. On this matter, the Board of Commissioners is committed to implementing the necessary measure in strengthening the supervisory and advisory function, in line with efforts to increase the effectiveness of the worki relationship with the Board of Directors. The Board of Commissioners will continue to encourage the strengthening of Waskita’s risk management to face the business dynamics, in addition to supporting the achievement of performance targets through the implementation of the Company’s business transformation.

Supervision of Strategy Preparation and Implementation

In 2022, the Board of Commissioners, supported by the Committees, supervised the preparation and implementation of strategies by the Board of Directors and the related staff. This supervision includes short-term and long-term strategies contained in Waskita’s RKAP and RJPP. This is part of the implementation of the supervisory function of the management of Waskita by the Board of Directors, which in 2022 has been carried out effectively in accordance with applicable regulations.

Fundamentally, supervision of the preparation and implementation of Waskita’s strategy has been carried out through a working relationship between the Board of Commissioners and the Board of Directors, which among others is carried out through holding joint meetings and Board of Commissioners meetings by inviting members of the Board of Directors.

... Read MoreShow Less

Supervision of Strategy Implementation

The Board of Commissioners is the organ in charge and responsible for carrying out the functions of supervising and providing advice on the management of Waskita. In carrying out its duties and responsibilities, the supervisory function of the Board of Commissioners includes the process of reviewing and granting approval of the strategic plans and strategic policies contained in the Company’s Work Plan and Budget (RKAP) and the Company’s Long-Term Plan (RJPP). Periodically, the Board of Commissioners conveys the results of supervision and advice provision to the GMS, including when there is a significant decline in Waskita’s performance.

For all the duties and responsibilities carried out, the Board of Commissioners reports that the Board of Commissioners with the support of related staff, has carried out the supervisory and advisory functions for the management of Waskita in 2022. The Board of Commissioners has proactively supervised the preparation of strategies and strategic policies by the Board of Directors contained in Waskita’s RKAP and RJPP. In addition, the Board of Commissioners and the Committees have also supervised the strategies and strategic policies implemented in 2022.

The Board of Commissioners considers that the Board of Directors and all related staff have developed and implemented Waskita’s strategy and strategic policies comprehensively, according to the work plan and budget that have been determined. In addition, the Board of Commissioners regards that the strategies and strategic policies prepared and implemented were able to respond to the existing challenges and opportunities and are adaptive to the development of Waskita’s external conditions. The Board of Commissioners considers that the implementation of strategic strategies and policies has been carried out by taking into account the recommendations and advice given, based on the implementation of the working relationship between the Board of Commissioners and the Board of Directors.

In 2022, the Board of Commissioners specifically focused on supervision on a number of aspects of Waskita’s performance, as follows:

  1. Accelerating the financial restructuring process by taking into account the directives from the Ministry of SOEs.
  2. The performance of PT Waskita Karya (Persero) Tbk, which in general has shown significant improvement.
  3. Development of 8 streams of financial recovery of PT Waskita Karya (Persero) Tbk.
  4. Use of PMN funds and rights issue.
  5. Achievement of the Company’s performance in 2022.

... Read MoreShow Less

Mechanism and Frequency of Advice-Giving to the Board of Directors

During 2022, the Board of Commissioners reports that the function of providing advice on the management of Waskita has been carried out through an effective working relationship with the Board of Directors and related staff. This working relationship has been carried out through daily communication and through holding joint meetings of the Board of Commissioners and the Board of Directors regularly. Furthermore, the Board of Commissioners has also held working meetings that invite certain members of the Board of Directors to jointly hold discussions regarding specific issues faced by Waskita.

The Board of Commissioners reports that the function of providing advice carried out during 2022 was based on the results of monitoring the implementation of Waskita’s strategy and the development of Waskita’s internal and external dynamics. As of December 31, 2022, the Board of Commissioners ensures that the function of providing advice to the Board of Directors includes 2 (two) levels, namely the implementation of advice-giving (Performance Level) and monitoring the follow-up on advice given (Conformance Level).

For the advice-giving mechanism, the Board of Commissioners held joint meetings with the Board of Directors which have been held 15 (fifteen) times in accordance with the performance targets for 2022. In addition, the Board of Commissioners has held working meetings inviting members of the Board of Directors which in 2022 was held 31 (thirty one) times.

Moreover, in 2022, the Board of Commissioners also carried out 11 (eleven) work visits to project locations. Details on this matter are presented in the Good Corporate Governance chapter, Board of Commissioners subsection.

... Read MoreShow Less

Views on Business Outlook Prepared by the Board of Directors

During 2022, the implementation of the supervisory and advisory functions by the Board of Commissioners also covered a review of the business outlook prepared by the Board of Directors, which is reflected in the setting of a number of targets in the 2023 RKAP. The review of the business outlook serves as the basis for the Board of Commissioners in evaluating the adequacy of Company resources and internal readiness in facing the projected economic situation for 2023.

Based on the review, the Board of Commissioners views that the business outlook prepared by the Board of Directors have taken into account economic indicators and assumptions for a number of factors that may impact Waskita’s industry. Discussion of a number of indicators and assumptions used in preparing business outlook by the Board of Directors is as follows.

In general, the world economy for 2023 is estimated to be in a fairly tight situation. Referring to data released by the World Bank in January 2023, the world economy is projected to grow by 1.7%, lower than the estimated 2022 growth of 2.9%. The developed economies are projected to grow 0.5%, lower than the estimated growth in 2022 of 2.5%, while emerging economies are projected to grow 3.4% or similar to the estimated growth in 2022 of 3.4%.. A similar situation can also be seen in the projected growth in world trade volume which is 2.4% lower, as well as the energy commodity price index which is 21.2 points lower than the estimate for 2022.

In the midst of projected slowdown in world economic growth, Indonesia’s economy is expected to continue to grow strongly in 2023. This can be seen, among others, in the World Bank report stating Indonesia’s economic growth is projected at 4.8%, or above the country’s projected cumulative growth of emerging economies which amounted to 3.4%. Bank Indonesia in February 2023 also estimated that the Indonesian economy will be able to grow strongly, in the range of 4.5-5.3%.

Indonesia’s economic growth rate was based on a number assumptions, namely the increase in domestic demand, such as household consumption, continued completion of the National Strategic Project (PSN), and increase in Foreign Investment (PMA) in line with the increase in people’s mobility after the abolition of Public Mobility Restriction (PPKM).

The construction industry in Indonesia for 2023 is expected to remain conducive in line with the continued support from the Government of Indonesia for infrastructure development. Referring to the 2023 State Budget by the Ministry of Finance, infrastructure development is still one of the focuses of the Government of Indonesia’s strategy in increasing productivity and strengthening structural reforms in 2023. Therefore, the 2023 State Budget is directed, among others, to provide fiscal support, which can be seen through spending policies Central Government and Ministries/Agencies in 2023.

For such projections, the Board of Commissioners considers that Waskita has good business prospects for 2023. Waskita has the opportunity to be able to contribute optimally along with strong support from the Government and the projection of a conducive Indonesian economy in 2023. The Board of Commissioners ensures that the Board of Directors and related staff have prepared Waskita’s resources and readiness to support infrastructure development in the overall long-term efforts of the Government in reducing the level of economic disparity in a number of regions of Indonesia.

In this regard, the Board of Commissioners has submitted suggestions and recommendations regarding the strategies and strategic policies to be implemented by the Board of Directors for 2023, including:

  1. Increasing cost efficiency and effectiveness of cash management so that operating cash flow continues to improve.
  2. Accelerating the collection of project receivables, implementing marketing innovations to increase NKM, and prioritizing short-term projects.
  3. The Board of Commissioners requests the Board of Directors to focus on projects that experience cost and/or time overruns and take the necessary mitigation steps.
  4. Supporting the Board of Directors to increase their focus on human capital competencies and strengthen work culture and develop digitization of integrated business processes.
  5. Strengthening risk mitigation measures for the Company’s financial soundness.
  6. Emphasis on the Board of Directors to monitor and ensure the suitability of the use of PMN and Government Guarantee funds, in accordance with applicable regulations.

... Read MoreShow Less

Views on the Implementation of Good Corporate Governance

As of December 31, 2022, the Board of Commissioners has carried out the supervisory and advisory functions for the management of Waskita, including supervision of the implementation of GCG by the Board of Directors and the related staff. As an integral part of the implementation of GCG, the Board of Commissioners has carried out supervision of the fulfillment of Waskita’s compliance with the applicable laws and regulations. The supervision and advice-giving are carried out with the support of the Committees and through a working relationship with the Board of Directors, which has been carried out effectively in 2022.

For the implementation of the supervisory function that has been carried out, the Board of Commissioners views that the Board of Directors and all related staff have carried out the management of Waskita through effective and comprehensive implementation of GCG principles, in accordance with applicable laws and regulations and implementing standards. In line with this, the Board of Commissioners views that the Board of Directors to be committed to carrying out the development of Waskita’s organization, according to performance targets in the ongoing business transformation.

Furthermore, the Board of Commissioners views that the Board of Directors and all related staff have implemented Waskita’s management with an adequate governance structure and complete GCG soft-structure, according to developments in organizational needs and business dynamics. Through the working relationship between the two organs, the Board of Commissioners ensures that the Board of Directors has implemented an evaluation of the adequacy of the instruments up to the implementation of Waskita’s governance for 2022, the results of which serve as basis for consideration for efforts of GCG development in the following year.

Fundamentally, the Board of Commissioners views that the Board of Directors was able to maintain the quality of GCG implementation. This can be seen through the results of the GCG assessment for 2022 by BPKP, with a score of 86,810 with the title “Excellent”.

... Read MoreShow Less

Views On The Implementation Of Risk Management

Views and Role of the Board of Commissioners in the Whistleblowing System (WBS) Management

The Board of Commissioners, supported by the Audit Committee has supervised the implementation of the Whistleblowing System, including monitoring the incoming reports and the follow-up processes carried out. In this regard, the Board of Commissioners views that the implementation of the Waskita Whistleblowing System for 2022 has been carried out effectively, covering the entire process. In addition, the Board of Commissioners views that the party in charge of the Whistleblowing System have carried out adequate dissemination of information regarding reporting channels and mechanisms to reach all Waskita personnel.

Board of Commissioners regards that the Whistleblowing System owned and implemented within at Waskita during 2022 has been equipped with adequate organs and regulations, according to developments in internal and external dynamics. In addition, the Board of Commissioners views that the party in charge of Waskita’s Whistleblowing System has provided channels that can be accessed easily through a number of platforms, both online and offline media, by whistleblowers. In particular, the Board of Commissioners appreciates the existence of the website https://wbs.waskita.co.id/ which until 2022 has been well developed and managed.

Fundamentally, the quality of the Whistleblowing System management can be assessed through the number of reports received and followed up. In 2022, Waskita’s Whistleblowing System has received 10 (ten) reports. All reports have been handled and followed up according to the applicable procedures.

... Read MoreShow Less

Performance Assessment of Committees under the Board of Commissioners

For 2022, the Board of Commissioners considers that all Committees have properly carried out their respective duties and responsibilities. By carrying out these duties and responsibilities, the Board of Commissioners considers that each Committee has provided the necessary support for the implementation of the supervisory and advisory functions by the Board of Commissioners. The description of the performance assessment of each Committee for 2022 is as follows.

The Board of Commissioners assesses that the Audit Committee has carried out its duties and responsibilities effectively and thoroughly, covering supervision of the financial reporting, internal control system, implementation of governance, and supervision of Waskita’s compliance with the applicable laws and regulations. This can be measured, among others, through the holding of meetings and the submission of the Audit Committee reports, which have been carried out properly. Furthermore, the Board of Commissioners considers that the Audit Committee has carried out an effective working relationship with Internal Audit and external auditors throughout 2022.

The Board of Commissioners considers that the Risk Management Committee has carried out its duties and responsibilities comprehensively in 2022. This can be seen, among others, through the preparation and submission of annual activity plans, each of which has been approved by the Board of Commissioners. The Risk Management Committee has also carried out monitoring of Waskita’s risk management, reporting the results, and submitting recommendations for improvement to the Board of Commissioners. In addition, the Board of Commissioners is of the opinion that the Risk Management Committee has carried out an effective working relationship with the Risk Management & PMO Division, as well as carried out all the authorities independently and objectively.

The Board of Commissioners considers that the Nomination and Remuneration Committee has carried out its duties and responsibilities effectively during 2022 in supporting the implementation of nomination and remuneration function at Waskita. The Nomination and Remuneration Committee has conducted evaluations and submitted recommendations regarding Waskita’s nomination and remuneration function, as well as carrying out main duties related to GCG, including reviewing changes to the organizational structure. In addition, the Board of Commissioners considers that the Nomination and Remuneration Committee has also carried out periodic work meetings effectively, in accordance with the provisions and implementation targets.

... Read MoreShow Less

Changes in the Board of Commissioners Composition

In 2022, Waskita’s Board of Commissioners underwent 1 (one) change in composition. Through the Annual General Meeting of Shareholders on June 16 2022, the shareholders approved the honorable dismissal of Mr. Badrodin Haiti, Mr. Bambang Setyo Wahyudi, and Mr. Mochamad Fadjoeal Rachman from their respective positions as members of the Board of Commissioners. In addition, through the holding of the same GMS, the shareholders approved the appointment of Mr. Heru Winarko, Mr. Muhamad Salim, and Mr. I Gde Made Kartikajaya as members of the Board of Commissioners.

For such changes, the composition of the Board of Commissioners as of December 31, 2022 consisted of 7 (seven) members, namely 1 (one) President Commissioner/ Independent Commissioner, 2 (two) Independent Commissioners, and 4 (four) Commissioners, with the following explanation:

Board of Commissioners Composition as of December 31, 2022

Name Position Basis of First Appointment Basis of Reappointment Tenure
Heru Winarko President Commissioner/ Independent Commissioner Deed No. 50 dated June 24, 2022 - Until the 2027 Annual GMS
I Gde Made Kartikajaya Commissioner Deed No. 50 dated June 24, 2022 - Until the 2027 Annual GMS
Dedi Syarif Usman Commissioner Deed No. 12 dated October 7, 2021 - Until the 2026 Annual GMS
T. Iskandar Commissioner Deed No. 48 dated April 27, 2021 - Until the 2026 Annual GMS
Muhamad Salim Independent Commissioner Deed No. 50 dated June 24, 2022 - Until the 2027 Annual GMS
Ahmad Erani Yustika Commissioner Deed No. 48 dated April 27, 2021 - Until the 2026 Annual GMS
Muradi Independent Commissioner Deed No. 42 dated April 12, 2018 - Until the 2023 Annual GMS

... Read MoreShow Less

Closing Remarks

To close this report, the Board of Commissioners would like to appreciate the Board of Directors for the synergy and hard work that has been maintained throughout 2022. We, as the Board of Commissioners would also like to express our gratitude to all Waskita personnel for the hard work and dedication in supporting the fulfillment performance targets set to achieve long-term and sustainable business growth. Finally, the Board of Commissioners would like to thank all stakeholders for the support and trust that has been given.

We believe that with the hard work and support given, Waskita will be able to maintain operational and financial performance achievements in a sustainable manner for the coming years.

... Read MoreShow Less

Jakarta, June 2023

On behalf of the Board of Commissioners,

HERU WINARKO

President Commissioner/Independent Commissioner