Board of Commissioners Report

Esteemed Shareholders and Stakeholders,

As we always should be, praise the Supreme Being, God of the whole Universe. Through His guidance and compassion, PT Wijaya Karya Beton Tbk (the Company) gained the strength to keep moving forward amidst fluctuative macroeconomic conditions that demand high vigilance. It is an honor for me, representing the Board of Commissioners, to report WIKA BETON’s successful stride throughout 2022. It was a year highlighted by significant issues, and thank God we managed to navigate its implications properly.

One of such significant issues that we have to face as world citizen was the worsening global economy due to the impact of Russia’s military aggression on Ukraine. No longer after the attack was initiated, world oil prices surged to a level above USD100 per barrel, the highest since 2014. As a domino effect, commodity prices increased, distribution of global raw food hampered, and thus global inflation became inevitable.

The Board of Commissioners appreciates the Board of Directors for their achievements and hereby states that all members of the Board of Directors have carried out their functions and their respective duties optimally.

As of December 2022, the International Monetary Fund (IMF) through its World Economic Outlook reported that world economic growth was recorded at only 3.4% or decreased significantly from 6.2% in 2021 (year on year). As such, the world repeated its weakest economic growth phase after the global financial crisis and the critical phase of the COVID-19 pandemic.

On the same boat, Indonesia had to face business issues with these two countries. Imports of crude palm oil (CPO) and its derivative products have been hampered, energy tariffs have risen, as have the prices of other raw materials. These conditions ultimately prompted the Government to increase fuel prices, causing higher costs of transportation, logistics and other commodity prices.

Despite so, as of the fourth quarter of 2022, Indonesia’s economy continued to grow. This was driven by higher private consumption and non-construction investment, strong exports performance, and maintained people’s purchasing power against the inflation. Through these projections, Bank Indonesia recorded that the national economic growth was closed at 4.5% -5.3%.

Specifically for the construction industry, higher raw material prices and supply chain disruptions in the first quarter of 2022 are issues that hindered its performance. Based on the Indonesia Economic Growth Report for the fourth quarter of 2022 by the Central Bureau of Statistics (BPS), the construction industry recorded 2.01% growth, lower than 2.81% in the previous year.

Assessment of the Performance of the Board of Directors and the Basis for the Assessment

The Board of Commissioners uses several aspects as the basis to assess the Board of Directors’ performance in the current year. The main aspect is the Key Performance Indicator (KPI) which set the targets as jointly approved by the Board of Commissioners and Directors. The Board of Directors’ KPI is also inherent as part of the Company’s Work Plan and Budget (RKAP). Out of 15 Key Performance Indicators that has been set in the 2022 RKAP, The Board of Directors managed to exceed all the targets.

Overall, the Board of Commissioners is of view that the Board of Directors has scored excellent performance in 2022. The external factors that put disruptions within domestic economic stability and driven a higher raw material prices and distribution are manageable and thus the Board of Directors managed to exceed the targets. The Board of Commissioners appreciates the Board of Directors for their achievements and hereby states that all members of the Board of Directors have carried out their functions and their respective duties optimally.

Supervision on the Formulation and Implementation of Strategy

The Board of Commissioners is of view that the Board of Directors has executed proper initiative measures to increase efficiency and productivity in 2022. As we have implemented in the previous year, the efficiency strategy is the key that summarizes other initiatives. The Board of Directors also restructured the Company’s organization and composition to optimize the effectiveness of each function and to face challenges with higher agility.

Through well-implemented strategy, the Company managed to achieve the 2022 health level target, or achieved at 73.5 with the “HEALTHY A” category. This assessment was carried out based on the Decree of the Minister of SOE No.KEP-100/ MBU/2002 dated June 4, 2002 concerning Assessment of the Health Level of State-Owned Enterprises.

The Board of Commissioners supervises the formulation and implementation of strategy by the Board of Directors through observation mechanisms and regular coordination meetings. The matters that are of particular concern to the Board of Commissioners in terms of implementing the 2022 strategy are related to its accuracy and compliance with applicable regulations.

To lead at the forefront of the industry, we need a strong vision and manifest it wholeheartedly. Therefore, WIKA BETON carries the vision “To be a Leading Company engaged in the business of providing Engineering, Production, Installation (EPI) in Concrete Industry in Southeast Asia” and aspire to become a #ConcretExpert. This vision is our shared aspiration to become the best company in the precast concrete industry. Through this vision, we also share commitment, hopes, aspirations, as well as the spirit and readiness to expand our market reach. It is as evidenced in the Company’s significant milestone in 2022, or the establishment of Overseas Sales Area (WPLN). This WPLN will support WIKA BETON’s expansion in targeting international project potential and spreading our wings on the global competition.

The Board of Commissioners highlights this strategy as as the endeavor that worth appreciations and full supports from all of us. A milestone in our business expansion history and the fruition of our expertise that has been honed for more than 40 years. With the energy of the best human resources in the concrete industry, the Board of Commissioners is optimistic that the Company will progress more rapidly in terms of selling expertise for project management services.

Frequency and Method of Advising the Board of Directors

The Board of Commissioners is responsible to formulate advice and recommendations related to the Board of Directors’ queries on the Company’s management. Advice and recommendations can be provided through the Board of Commissioners’ Meetings or through other method.

The Board of Commissioners’ meetings are categorized into two, internal meetings of the Board of Commissioners and coordination meetings of the Board of Commissioners and Directors. Meanwhile, other method outside the Meeting is provided through digital platforms, particularly to respond to urgent issues and decisions that require quick decisions. The recommendations provided outside the meeting will then be discussed and determined through a formal meeting. The Board of Commissioners also conducts discussions through interviews with the Board of Directors to obtain insights regarding highly anticipated issues.

In 2022, the Board of Commissioners has conducted 12 Board of Commissioners meetings and 12 coordination meetings. Through these meetings, the Board of Commissioners has conveyed its recommendations to the Board of Directors, particularly regarding changes to the Company’s Organizational Structure, implementation of GMS and EGMS, appointment of Committee organs, and other matters related to the supervisory duties of the Board of Commissioners. All recommendations and decisions have been officially documented through the Board of Commissioners’ Decree.

Assessment on the Performance of the Board of Commissioners’ Supporting Committees

In carrying out its supervisory function on the implementation of good corporate governance, the Board of Commissioners is assisted by two committees, the Audit and Business Risk Committee and the Nomination, Remuneration and GCG Committee. Throughout 2022, the Board of Commissioners considers that the Audit and Business Risk Committee has carried out its strategic function in supervising the Company’s internal control through internal audit reports with due regard to applicable regulations and Good Corporate Governance principles, including the implementation of the Whistleblowing System.

The Audit and Business Risk Committee has also provided recommendations regarding the financial information audit, risk management implementation, and the results of internal audits by the Internal Audit Unit and external auditors by the Public Accounting Firm (KAP).

On the other hand, the Nomination, Remuneration and GCG Committee has also carried out their functions properly, particularly in identifying potential employee to enter the nomination process and continue the Company’s regeneration. The Nomination, Remuneration and GCG Committee has also implemented procedures for for the Board of Commissioners and Directors’ remuneration.

Overall, these two Committees have carried out their roles optimally in conducting a thorough review of operational, financial, risk management, remuneration systems, control systems and GCG implementation in the Company. The Board of Commissioners urges the Committees to maintain every positive findings and resolve the findings that need extra attention from the management properly and transparently.

Views on the Board of Directors’ Business Prospects

Embracing year 2023, the Board of Commissioners focuses on the correction of economic growth which is predicted to occur in all countries. The World Economic Outlook (WEO) from the International Monetary Fund (IMF) projects economic growth in 2023 at 3.2 percent and will further weaken in the upcoming year. Nonetheless, Indonesia’s growth is predicted to remain positive, both in terms of trade balance surplus and relatively good export-import growth. The construction industry is also projected to grow, in line with the election euphoria that will begin in the next year, the IKN’s potential, and the Company’s international projects.

Embracing next year’s projections which provide various highlights, the Board of Commissioners remains optimistic. We have evaluated the Board of Directors’ business prospects as outlined in the 2023 RKAP and consider that those strategies have been formulated comprehensively and with due regard to various aspects that will determine the Company’s achievements in the coming year.

The Board of Commissioners is of view that WIKA BETON’s future business growth will be maintained optimally. Through the development and strengthening of Human Capital, the Company will gain excellent resources to capture various opportunities as well as to grow sustainably. The Company will also manage to maintain its market share and get closer to realizing its vision.

Views on the Implementation of Good Corporate Governance

The aspect of corporate governance is one of the Board of Commissioners’s supervisory focuses. We are committed to ensure the implementation of high standard governance at WIKA BETON, which conforms to the principles of Good Corporate Governance (GCG) and to AKHLAK’s core values. Throughout 2022, the Board of Commissioners has carried out active supervision and advice provision on various management aspects, including risk management.

In its implementation, the Board of Commissioners continues to encourage the optimization of shareholder value as reflected in the higher achievement of GCG score. In 2022, the Company assessed its GCG implementation through a self-assessment method and scored 90.75 with the “Excellent” predicate.

The Board of Commissioners appreciates the Board of Directors’ efforts to intensify governance values in the Company’s operations. The Board of Commissioners believes that this effort will increase transparency and accountability so as to maintain business process quality and the Company’s performance.

Views on the Implementation of the Whistleblowing System

Whistleblowing System/WBS is one of the governance practices that has been running effectively, thus the Company takes continues efforts to improve its implementation. Through this mechanism, the Company is able to identify and minimize any potential for fraud, policy deviations, or internal violations. The Board of Commissioners’ role in implementing the WBS is to supervise the effectiveness of its implementation. In addition, the Board of Commissioners is also involved in the decison making process on incoming reports that are centralized to the GCG Compliance Team.

Throughout 2022, the Company did not receive any reports of violations through the WBS. This indicates that all WIKA BETON’s employees always uphold compliance as an important aspect. This spirit is expected to guide the Company in maintaining credible and integrity performance. The Company carries out routine socialization to increase employee awareness of WBS’ policies, mechanisms and procedures. The socialization is carried out through internal communication media such as management and employee meetings or by involving external parties.

Changes in the Composition of the Board of Commissioners and Its Objective

In 2022, the Board of Commissioners’ composition was changed two times. The resolution of the 2021 Annual General Meeting of Shareholders dated April 18, 2022 approved the honorable discharge of Mr. Ade Wahyu and Mr. Indrieffouny Indra from the Company’s Board of Commissioners. This AGMS resolution also appointed Mr. Mursyid as President Commissioner and Mr. Dadan Tri Yudianto as Independent Commissioner. This is as recorded in the Deed of Statement of GMS Resolutions No. 43 dated April 18, 2022. Thus, the Board of Commissioners’ composition is as follows:

Position Name
President Commissioner Mursyid
Commissioner R. Permadi Mulajaya
Commissioner Harno Trimadi
Independent Commissioner Priyo Suprobo
Independent Commissioner Dadan Tri Yudianto

The second change was in conformity with the resolution of the 2022 Extraordinary General Meeting of Shareholders dated August 23, 2022 which approved the honorable discharge of Mr. Mursyid as President Commissioner and appointed Mr. Harum Akhmad Zuhdi to replace his position.

Thus, as of December 31, 2022, the Board of Commissioners’ composition is as follows:

Position Name
President Commissioner Harum Akhmad Zuhdi
Commissioner R. Permadi Mulajaya
Commissioner Harno Trimadi
Independent Commissioner Priyo Suprobo
Independent Commissioner Dadan Tri Yudianto

These changes were made with due regards to the resolutions of the General Meeting of Shareholders, it has been carried out in accordance with the law and with the presence of shareholders. Through this opportunity, I am honored to extend my appreciation to Mr. Ade Wahyu, Mr. Indrieffouny Indra, and Mr. Mursyid for their contributions to the Company. With the current management, the Board of Commissioners will continue to carry out its functions optimally and responsibly.

Profuse Appreciation

The spinning wheels of the economy is there to remind us, as a business entity, to always look forward and strive to achieve better performance.

The Board of Commissioners extend profuse gratitude, especially to PT Wijaya Karya (Persero) Tbk as our Holding Company and to the Board of Directors for their conducive coordination that constructs optimum synergy. To all Shareholders for always directing our endeavors, and all other stakeholders who grow hand in hand with WIKA BETON.

We have honed our expertise, resilience, and capacities thus we hold the key to “Winning the Competition”. May God the Almighty always bestow His grace upon us and strengthen our steps towards a promising future.

On Behalf of the Board of Commissioners,

Harum Akhmad Zuhdi

President Commissioner