Report of the Board of Commissioners

“Throughout 2020, Board of Commissioners’ supervisory and advisory focus included the planning and implementation of Corporate Work Plan and Budget (RKAP), follow-up to the General Meeting of Shareholders (GMS) resolutions, implementation of Good Corporate Governance, effectiveness of internal control system, as well as implementation of Corporate culture and prevailing laws and regulations.”

Dear Shareholders and Stakeholders,

Our gratitude goes to the presence of God Almighty who has bestowed His grace and blessings on us, so that PT Waskita Karya (Persero) Tbk managed to sail through the challenging year of 2020 with favorable achievements.

In carrying out its strategic function, Board of Commissioners has performed supervisory and advisory duties to Board of Directors in good faith, responsible and prudence manner for the benefit of the Company. As Board of Commissioners, we made every efforts ensure the checks and balances by monitoring the adequacy of supervision and the effectiveness of compliance with prevailing laws and regulations, and guided by the principles of Good Corporate Governance (GCG).

The supervisory and advisory focus by Board of Commissioners in 2020 included planning and implementation of Corporate Work Plan and Budget (RKAP), follow-up to the General Meeting of Shareholders (GMS) resolutions, implementation of Good Corporate Governance, effectiveness of internal control system as well as implementation of Corporate culture and prevailing laws and regulations.

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Economic and Industrial Overview

Board of Commissioners realizes that Waskita Karya’s business activities are indirectly influenced by the economic and industrial conditions, which is also one of the reasons for Board of Commissioners’ consideration in evaluating the Board of Directors performance. In 2020, the whole world was facing an extraordinary crisis that has never been experienced before along with the outbreak of the Corona Virus Disease 2019 (Covid-19) pandemic in almost all countries in the world. The Covid-19 pandemic, which was first detected at the end of 2019 in China, not only caused a major health and humanitarian crisis, but also caused an economic crisis that resulted in worldwide panic regarding the occurence of economic recession.

The global economy was under enormous pressure due the Covid-19 pandemic that has hit many countries in the world. In the World Economic Outlook January 2021 report, the International Monetary Fund (IMF) estimated that global economy in 2020 will contract by 3.5%. The significant weakening of global economic activity was influenced by lockdown policies or restrictions on people mobility to reduce the spread of the virus, which resulted in a sudden halt in economic activity in various countries.

The Covid-19 pandemic, which began to emerge in Indonesia in March 2020, has disturbed the growth rate of national economy. The Central Statistics Agency (BPS) noted that Indonesia’s economy in 2020 experienced a growth contraction of 2.07% year on year (yoy), which was influenced by the weakening in various industrial sectors due to the pandemic. The construction sector is one of the sectors that has been significantly affected by the pandemic, with the delay of works on several projects due to large-scale social restrictions (PSBB) in various regions to break the chain of Corona virus spread. The Covid-19 epidemic has also been felt by the Company, with delay in several projects that are currently being worked on.

In the midst of the Covid-19 pandemic conditions, the Government is committed to continuing to provide stimulus to drive the national economy. One of the steps taken by the Government was to increase the expenditure budget through infrastructure development as a mainstay of maintaining people’s purchasing power and supporting national economic growth as part of the National Economic Recovery (PEN) effort. In fact, the Ministry of Public Works and Public Housing (PUPR) has also invited construction players to get back up and revive the national construction service industry.

Taking into account both global and national economic conditions as well as industry conditions, Board of Commissioners appreciates the efforts made by Board of Directors to continue to strengthen the Company’s existence in the national construction industry amidst the very challenging conditions in 2020.

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Assessment on Board of Directors Performance

2020 was a year full of challenges for the Company, in which the Covid-19 pandemic has obstructed the Company’s performance. Board of Commissioners realizes that the declining performance in 2020 was influenced by economic conditions that were worse than in 2019 due to the Covid-19 pandemic.

However, Board of Commissioners considers that Board of Directors has tried their best to maintain the stability of the Company as well as to maintain the trust of stakeholders. In addition, Board of Commissioners also appreciates the efforts made by Board of Directors in making employee safety and health a very important focus in the midst of pandemic, and became the main concern of Board of Directors in managing the Company. To that end, Board of Commissioners highly appreciates the various strategic initiatives taken by Board of Directors in the face of the difficult conditions in 2020.

Appreciation is also given by Board of Commissioners upon Board of Directors’ efforts in managing the Company, in which Waskita Karya has won 37 project auctions from the 105 participations in project auctions in 2020, with a total value of Rp39.38 trillion. Of the 37 successful project auctions, the Company recorded new project value amounted to Rp21.46 trillion. Thus, the Company’s competitiveness in terms of project value was 54.59%, experiencing a 3.92% increase in competitiveness from the previous year. In addition, the number of projects won by the Company in 2020 also increased by 27.59% compared to 2019.

This is a very good achievement for the Company considering the uncertain situation in 2020 amidst the Covid-19 pandemic. For such good achievement, Board of Commissioners assesses that Board of Directors has properly carried out their duties and responsibilities managing the Company in the 2020 fiscal year.

Board of Commissioners also appreciates the entire Board of Directors and Management of the Company who always uphold and execute their commitment to prioritize the quality, health, safety and environment aspect in every business activity of the Company.

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Oversight on Policies and Strategies Implementation in 2020

One of Board of Commissioners’ function is to oversee the implementation of strategies by Board of Directors. In formulating the Company’s performance targets for 2020, Board of Commissioners has the role of providing directive and input according to its capacity and capabilities, including directive and input for the strategic work plan formulated by Board of Directors. For that, Board of Commissioners also endures the responsibility of proper implementation of the strategic plan. This oversight is exercised through various working relationship mechanisms between Board of Commissioners and Board of Directors.

Board of Commissioners proactively reviews and monitors the implementation of policies and strategies set at the beginning of the year with Board of Directors, both in operational management and in financial management. These constructive and solutive recommendations as well as suggestions for operational and financial management will then be submitted to Board of Directors and other related organs through the mechanism of Joint Meetings of Board of Commissioners and Board of Directors and Coordination Meetings which are held quarterly to discuss the aspects requiring special attention. Board of Commissioners also regularly conducts direct field supervision through work visits to the project sites to ensure adequate supervision and review the conformity of processes and work results with the specified qualifications.

As mandated in applicable laws and regulations, in particular Law No. 40 of 2007 concerning Limited Liability Companies, Board of Commissioners has played its role in overseeing the management of operations and business run by Board of Directors. Board of Commissioners emphasizes that the right strategy is the factor that can determine the success of the Company. Therefore, the strategy formulation needs to pay attention to the previous year’s implementation and current conditions, so that the strategy that will be implemented in the following year can be right on target. Through providing advice, Board of Commissioners plays a role in strategy formulation, which further supervises the implementation of strategies that have been prepared by Board of Directors.

Board of Commissioners also provides suggestions and input in determining the plans and targets contained in the Corporate Work Plan and Budget (RKAP), which were prepared at the beginning of the year by considering internal and external assumptions that are considered to have a significant influence on the Company’s business continuity.

In order to carry out the Company’s operations in 2020, Board of Commissioners at all times directed Board of Directors to always focus on developing the construction and investment business by applying the Culture of Compliance (Compliance Awareness). Board of Commissioners perceived that the strategic initiatives carried out by Board of Directors in 2020 has been in line with the plan set out in the 2020 Revised RKAP.

Based on the oversight that has been carried out by Board of Commissioners, either through discussions with Board of Directors regarding the Company’s performance, or by direct visit to the site, Board of Commissioners believes that the Company has carried out its business in accordance with the annual work plan, vision and mission as well as the Shareholders’ strategic directives. Through careful observation on macroeconomic conditions, changes in business environment and changes in consumer behavior and needs, the Company was able to adapt and implement relevant strategies according to the latest developments.

In accordance with the 2020 Revised RKAP, there are a number of strategic initiatives carried out by Board of Directors. Board of Commissioners assesses that Board of Directors has implemented a number of strategic policies appropriately and effectively during 2020. Board of Commissioners will continue to monitor the progress and obstacles faced in realizing the target of these strategic initiatives.

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Advisory Frequency and Mechanism to Board of Directors

Board of Commissioners constantly maintains a very good working relationship with Board of Directors and puts forward the principle of respecting each other’s authority. Board of Commissioners supervises the strategy implementation by Board of Directors by always placing supervision over the implementation of Company’s strategy as one of the priorities. All operational activities as well as financial management are at all times carried out based on best practices of applicable principles in accordance with laws and regulations.

Board of Commissioners strives to carry out its responsibilities by providing constructive suggestions and recommendations to Board of Directors, in managing the Company. One thing that is emphasized by Board of Commissioners to Board of Directors is to always prioritize compliance aspect and Good Corporate Governance (GCG) principles.

Board of Commissioners regularly holds meetings with Board of Directors to discuss various matters related to the management of the Company which is carried out by Board of Directors in a joint meeting forum. In the forum, Board of Commissioners can request an explanation from Board of Directors regarding the Company’s performance achievements and obstacles faced. Board of Commissioners can share their views and advise Board of Directors on these matters. Throughout 2020, Board of Commissioners has held 17 (seventeen) joint meetings by inviting the Board of Directors.

In addition to the joint meeting forum, the supervisory duties of Board of Commissioners is also carried out through working visits to project site to ensure adequate supervision in the field while still applying health protocols. Throughout 2020, Board of Commissioners has made 5 (five) visits to the project location, with the following details:

No Date Project Location
1 February 5, 2020 KLBM Toll Road, Surabaya
2 October 27, 2020 Tebing Tinggi Parapat Toll Road Zone 1 to zone 4, Medan,
Kuala Tanjung Indrapura Toll Road zone 1 to zone 2, Medan
3 November 7, 2020 Tebing Tinggi Parapat Toll Road Zone 1 to zone 4, Medan
4 November 15, 2020 KLBM Intersection Toll Road, Surabaya,
WBP Batching Plan, Surabaya
5 November 27, 2020 Kuala Tanjung Indrapura Toll Road zone 1 to zone 2, Medan,
Junction Tebing Tinggi JO with HK, Medan

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View on Business Outlook Prepared by Board Of Director

In the 2021 State Budget Plan (RAPBN) “Acceleration of Economic Recovery and Strengthening Reform” which was released by the Ministry of Finance on August 14, 2020, and was approved by the Indonesian House of Representatives (DPR) on September 25, 2020, the national economy is targeted to experience a growth of 4.5% to 5.5% with an inflation rate of 3.0%. To withstand the negative impact of the Covid-19 pandemic on the economy, the Government has also taken and will continue to take extraordinary policy steps to maintain and restore the health and socio-economic conditions of the people and the business world. The certainty of the Covid-19 vaccine is expected to encourage the recovery of people’s purchasing power.

The 2021 national economy outlook is predicted to improve in line with the projection for global economic recovery and the impact of fiscal support on accelerating economic recovery, including support for pandemic control. In November 2020, the Ministry of Finance revealed in its release that the Government had allocated a budget for infrastructure development in 2021 amounting to Rp417 trillion. The infrastructure development policy in 2021 is a sustainable development after the Covid-19 pandemic by strengthening digital infrastructure and encouraging logistical efficiency and connectivity. Infrastructure policies are directed at labor-intensive infrastructure that supports industrial and tourism areas, development of public health facilities and basic necessities such as water, sanitation, and housing to support the strengthening of national health system. The 2021 infrastructure budget is also earmarked for the completion of pending priority activities by 2020.

The strategic output targets in the 2021 State Budget (APBN) released by the Ministry of Finance for infrastructure development are as follows.

The strategic policy taken by the Government in to accelerate economic recovery by allocating funds amounting to Rp417 trillion for infrastructure development, is an opportunity for the Company. In the 2021 RKAP prepared by Board of Directors and has been approved by Board of Commissioners, stated that in general, the Company has the following strength to optimize these opportunities:

  1. Has the ability production with sliding form patent, electric umbrellas, precast certification, and zero accident certification;
  2. Has an integrated information system using SAP Hana ERP both at head office and at project area;
  3. Has the ability in human capital that are reliable, has sufficient competencies especially in the engineering field, and mostly at productive age;
  4. Has the ability in supply chain management, digitalization of integrated procurement programs and budget control using SAP HANA.

The Company’s strategic steps that are expected to be carried out in 2021 include:

  1. Increase in External Portion
    1. Expansion of foreign market share;
    2. Increased conventional contracts.
  2. Creation of Balanced Portfolio
    1. Increasing the investment portion in non-toll infrastructure and property sector with good feasibility;
    2. Toll road investment based on the divestment of existing toll roads;
    3. Strategic partnership.
  3. Maintain the availability of Company’s cash flow in 2021
    1. Ensure timely disbursement of receivables for 2021;
    2. Ensure that the 2021 divestment realization is in line with the plan;
    3. Keep lower percentage of turnkey projects than non turnkey projects;
    4. Ensure that the Company’s cash out plan for working capital, investment and operational needs of subsidiaries is in accordance with the plan.

Board of Commissioners strongly supports the Company’s optimism in running its business for 2021 and coming years, by taking a number of strategic measures, i.e. performing business and finansial transformation. In addition, with the start of the Covid-19 Vaccination program carried out by the Government, the Company has the confidence that its performance and productivity will continue to increase. The Company is also optimistic to be able to complete all toll road divestment plans, which were mostly have started since 2020.

In the view of Board of Commissioners, the strategies to be carried out are in line with the Corporaet Long Term Plan (RJPP) 2021-2025. For that, Board of Commissioners will give full and continous support for the targets that have been set for 2021.

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View on Good Corporate Governance Implementation

The Company strives to improve its performance by improving the Company’s structure and culture as well as compliance with best practices based on the principles of Good Corporate Governance (GCG), i.e. Transparency, Accountability, Responsibility, Independency, and Fairness (TARIF). Board of Commissioners believes that the implementation of GCG principles in the Company has been running well and improved continuously. The GCG organs, both under Board of Commissioners and under Board of Directors, have properly carried out their functions, duties and responsibilities and have established good cooperation. Implementing GCG in every step of the Company’s management has indirectly increased the benefits for Shareholders and other Stakeholders on an ongoing basis.

In 2020, the Company has conducted an assessment or measurement of GCG implementation with reference to the Decree of Ministry of State-Owned Enterprises No. SK-16/S. MBU/2012 concerning Indicators/Parameters for Assessment and Evaluation of Good Corporate Governance Implementation. The Company’s GCG assessment for the 2020 fiscal year conducted by the Financial and Development Supervisory Agency (BPKP) obtained a score of 88.88 with the qualification of GCG implementation quality of “Very Good”. This score has improved compared to the previous year with a score of 88.058. This shows that GCG has been implementing properly within the Company.

Board of Commissioners highly appreciates Board of Directors and the entire management who have worked optimally to implement GCG in managing the Company during 2020. Board of Commissioners constantly supervises and gives suggestion to implement the principles of Good Corporate Governance at all time, to consistently apply risk management practices that are in line with mutually agreed structure, and to strengthening the Company’s internal control system that is in line with the provisions and standard of internal audit function to reduce the risk of financial loss, deviation or violation of the precautionary principle.

Regarding GCG implementation in the Company, in 2020 Waskita Karya has obtained ISO 37001: 2016 certification regarding Anti-Bribery Management System. This certification proves as well as a reference for the Company to always be committed to anti-bribery management in every business activity

Board of Commissioners believes that Waskita Karya’s current GCG tools are in line with the Company’s business processes, so as not to impede the Company’s corporate activities. Board of Commissioners is always involved in various GCG implementations, by conducting supervision either directly or through supervision carried out by Board of Commissioners Committees, namely Audit Committee, Risk Management Committee, and Nomination and Remuneration Committee, as stated in these comittees’ charter.

Based on the supervision carried out by Board of Commissioners together with the Committees, Board of Commissioners gives high appreciation upon the Company’s efforts to implementing GCG principles optimally. This is in line with the commitment shown by the Company to continue making GCG principles as the operational foundation for all of its business activities. Board of Commissioners supports the Company to remain focused on strengthening the corporate governance system by following the standards set by regulators. The continuous implementation of GCG basic principles that has been carried out so far, will ensure the Company’s business continuity going forward. Board of Commissioners hopes that the implementation of GCG within the scope of the Company will continue to be maintained, even improved, in order to achieve sustainable growth.

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

The Company has a Gratification Control procedure and a whistleblowing system (WBS) as a mechanism to prevent fraud in the Company. The existence of WBS is part of the Company’s commitment to make GCG principles as the foundation of every aspect of its day-to-day operations. The WBS itself, enables a reporting mechanism that ensures the confidentiality of the whistlebower. Within the scope of the Company, WBS has been managed quite well. The WBS mechanism also enables reporting procedures for fraud within the Company, including Insider Trading, Fraud, Money Laundrying, Anti-Bribery and Corruption (ABC), discrimination and other irregularities, for all levels of organization, the Board of Commissioners and Board of Directors.

WBS management in the Company is carried out by 3 (three) special organs, namely the SVP - Internal Audit, the Investigation Committee, and the Final Decision Team (TPTA). The Company guarantees that all incoming violation reports will be followed up properly. Repeated and systemic violations will be reported to the relevant officials who have the authority to make corrections. Currently, the Company has a WBS channel, i.e. https://wbs.waskita.co.id which can be accessed by the public to submit reports of violations within the scope of the Company. Throughout 2020, the Whistleblow System Management has received 12 (twelve) reports and have been followed up in accordance with applicable laws and regulations.

Board of Commissioners, through Audit Committee, carries out oversight responsibility for the reporting process and the process of monitoring compliance with laws and regulations in the Company. Board of Commissioners considers that the Whistleblowing System management has been running properly, especially with the existence of Whistleblowing System banner on the front page of the Company’s website as a form of WBS socialization to stakeholders.

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Assessment on Performance of Committees under Board of Commissioners

As previously stated, in evaluating and reviewing the Company’s performance as part of the consideration in the supervision of the Company’s management carried out by Board of Directors, Board of Commissioners is assisted by 3 (three) committee organs, namely Audit Committee, Risk Management Committee, and Nomination and Remuneration Committee. These three committees coordinate actively with all partners involved so that the processes and mechanisms for deepening and analyzing the information required by Board of Commissioners can be carried out properly.

Audit Committee has carried out supervisory responsibilities over the financial reporting process, internal control system, audit process, GCG implementation and monitoring process of compliance with laws and regulations in the Company. Meanwhile, Risk Management Committee has carried out supervisory responsibilities and ensured that the risk mitigation process in the Company is running well as well as conducting regular assessments and providing recommendations regarding the Company’s business risks. Likewise, Nomination and Remuneration Committee has carried out duties and responsibilities in assisting Board of Commissioners by providing professional and independent opinions to ensure the implementation of Company’s nomination, remuneration and GCG duties.

Board of Commissioners considers the performance of these three committees to be satisfactory, because they at all times provide adequate feedback to Board of Commissioners and carry out their duties and functions in accordance with the Committee Charter. Board of Commissioners’ assessment on the performance of these three committees is also based on the results of assessment conducted by BPKP, where the three committees are deemed to have carried out their duties properly in accordance with the Articles of Association and applicable regulations. This is reflected in the combined GCG score of Board of Commissioners and its supporting organs, which achieved a score of 30,157 or 86.16% from the weight of Board of Commissioners aspect of 35,00.

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Changes in Board of Commissioners Composition

Throughout 2020, the composition ofmembers of the Board of Commissioners underwent changes based on the resolution of Annual General Meeting of Shareholders held on June 5, 2020.

The chronology of changes in the composition and structure of Board of Commissioners throughout 2020 is as follows:

Chronology of Changes in Board of Commissioners Composition throughout 2020

Period of January 1 – June 5, 2020 Period of June 5 – December 31, 2020 Description
Badrodin Haiti
(President Commissioner)
Badrodin Haiti
(President Commissioner/ Independent Commissioner)
The Annual General Meeting of Shareholders on June 5, 2020 decided to transfer the assignment of Badrodin Haiti from being President Commissioner to President Commissioner concurrently Independent Commissioner
R. Agus Sartono
(Commissioner)
- The Annual General Meeting of Shareholders on June 5, 2020 decided to honorably discharged R. Agus Sartono as the Company’s Commissioners
Danis Hidayat Sumadilaga
(Commissioner)
Danis Hidayat Sumadilaga
(Commissioner)
The Annual General Meeting of Shareholders on June 5, 2020 decided to reappoint Danis Hidayat Sumadilaga as the Company’s Commissioner for the 2nd period
- Mochamad Fadjroel Rachman
(Commissioner)
The Annual General Meeting of Shareholders on June 5, 2020 decided to appoint Mochamad Fadjroel Rachman as the Company’s Commissioner for the 1st period
Robert Leonard Marbun
(Commissioner)
Robert Leonard Marbun
(Commissioner)
-
Muhammad Aqil Irham
(Independent Commissioner)
- The Annual General Meeting of Shareholders on June 5, 2020 decided to honorably dismiss Muhammad Aqil Irham as the Company’s Independent Commissioner
- Bambang Setyo Wahudi
(Independent Commissioner)
The Annual General Meeting of Shareholders on June 5, 2020 decided to appoint Bambang Setyo Wahudi as the Company’s Independent Commissioner for the 1st period
Muradi
(Independent Commissioner)
Muradi
(Independent Commissioner)
-
Viktor S. Sirait
(Independent Commissioner)
Viktor S. Sirait
(Independent Commissioner)
The Annual General Meeting of Shareholders on June 5, 2020 decided to reappoint Viktor S. Sirait as the Company’s Independent Commissioner for the 2nd period

Thus, as of December 31, 2020, the composition and structure of Board of Commissioners is 7 (seven) persons, consisting of 1 (one) President Commissioner concurrently as Independent Commissioner, 3 (three) Commissioners, and 3 (three) Independent Commissioners.

Name Position Basis of First Appointment Basis of Re-appointment Service Period
Badrodin Haiti President Commissioner / Independent Commissioner Deed No. 52 dated November 25, 2016 Deed No. 08 dated June 8, 2020 (Appointment as Independent Commissioner) Until the Annual GMS in 2021
Danis Hidayat Sumadilaga Commissioner Deed No. 84 dated April 24, 2015 Deed No. 08 dated June 8, 2020 Until the Annual GMS in 2025
Mochamad Fadjroel Rachman Commissioner Deed No. 08 dated June 8, 2020 - Until the Annual GMS in 2025
Robert Leonard Marbun Commissioner Deed No. 44 dated May 15, 2019 - Until the Annual GMS in 2024
Bambang Setyo Wahudi Independent Commissioner Deed No. 08 dated June 8, 2020 - Until the Annual GMS in 2025
Muradi Independent Commissioner Deed No. 42 dated April 12, 2018 - Until the Annual GMS in 2023
Viktor S. Sirait Independent Commissioner Deed No. 84 dated April 24, 2015 Deed No. 08 dated June 8, 2020 Until the Annual GMS in 2025

The composition and structure of Board of Commissioners as of December 31, 2020, is a follow-up to the resolutions of Annual General Meeting of Shareholders dated June 5, 2020 which have been agreed upon by the majority of Shareholders attended the meeting.

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Closing Remarks and Appreciation

There are many lessons learned from the Company’s performance achievements in 2020 and hopefully the results of the hard work that have been achieved can continue to be improved in accordance with Company’s vision to “Become a Trusted and Sustainable Company in the Integrated Construction and Investment Sector”.

The entire Board of Commissioners would like to thank the Shareholders, consumers, business partners, employees and other stakeholders for their trust in supporting the Company’s business continuity. Board of Commissioners highly appreciates Board of Directors who have been managing the Company and able to maintain the stability of the Company as well as the trust of stakeholders.

Board of Commissioners would also like to express gratitude to the Ministry of SOE for carrying out a supervisory function and supporting the Company’s business resilience throughout 2020. The Company is fully committed to providing sustainable value and benefits to consumers and stakeholders in general.

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Jakarta, March 25, 2021

President Commissioner

PT Waskita Karya (Persero) Tbk

Badrodin Haiti