To Our Shareholders and Stakeholders,
With gratitude, allow me to commence this report by collectively examining the achievements and challenges encountered by PT Wijaya Karya Beton Tbk (the Company) or abbreviated as WIKA Beton, throughout 2023. This report serves as a reflection of the Company’s journey, in which we persistently face industry dynamics with steadfast determination and a spirit of continuous innovation. It is an honor for me, representing the Board of Commissioners, to convey that WIKA Beton successfully navigated through the complexities of 2023, characterized by various significant issues, which we responded with a series of prudent strategies.
Throughout the year 2023, the global economy exhibited strength, despite the slow and uneven recovery. There is also a widening divergence in growth across various regions, accompanied by ongoing challenges stemming from the longterm consequences of Covid-19, unresolved conflicts, escalating geo-economic fragmentation, the impact of stringent monetary policies addressing inflationary pressures, reduced fiscal stimulus due to high debt levels, and implications of extreme weather. In the January 2024 edition of the World Economic Outlook (WEO), the International Monetary Fund (IMF) projects a deceleration in global economic growth from 3.5% in 2022 to 3.1% in 2023.
On the other hand, Indonesia’s economic growth remained robust amidst global economic uncertainties. The economic growth of Indonesia, as outlined by Bank Indonesia in the 2023 Indonesian Economic Report, indicates a relatively stable growth ranging from 4.7% to 5.5%. The sources of Indonesia’s economic growth in 2023 have shifted from external demand, marked by improved export performance due to commodity price increases, to increased domestic demand driven by the conclusion of the Covid-19 pandemic and heightened societal activities, despite the fact that consumer consumption patterns have not yet returned to normal.
The IMF forecasts that Indonesia will remain the country with the largest GDP in the ASEAN region. In its projections, the IMF notes that Indonesia’s GDP in 2023 is expected to reach USD 1.39 trillion. This figure is more than twice the GDP of Thailand, which is the second-largest ASEAN country in terms of GDP. Additionally, S&P Global’s report also releases Purchasing Managers’ Index (PMI) data for other ASEAN countries. When ranked by PMI as of August 2023, Indonesia holds the top position in the expansion level at 53.9. The three other countries experiencing expansion are Singapore (53.6), Myanmar (53), and Vietnam (50.3). With these developments, Bank Indonesia anticipates that the economic growth in 2023 will close positively within the range of 4.5-5.3%.
The Board of Commissioners acknowledges that the year 2023 posed considerable challenges for the industry at large and specifically for WIKA Beton. Various issues stemming from both external and internal factors presented unique challenges for the Company in determining its position amidst instability. Nevertheless, the Board of Commissioners remains optimistic as the Board of Directors successfully formulated strategic policies enabling WIKA Beton to maintain its market leadership.
This optimism is based on the achievement of the Key Performance Indicators (KPIs) by the Board of Directors, which were consistently fulfilled. All members of the Board of Directors executed their functions optimally in accordance with their respective responsibilities. Consequently, the Board of Commissioners concludes that the Board of Directors’ performance in 2023 is deemed excellent. The presence of external and internal factors did not deter the Board of Directors from navigating the Company’s path and ensuring growth amid challenges.
The KPIs of the Board of Directors are documented in the Company’s Work Plan and Budget (RKAP) as an integral aspect and were collectively approved during its formulation. In 2023, out of the total 1,000 KPIs, the Board of Directors successfully fulfilled 1,015, exceeded the established targets. The Board of Commissioners commends the Directors as the Company has now devised sharper strategies to enhance operational effectiveness and efficiency, even though some financial targets were not met.
The Board of Commissioners plays a crucial role in overseeing the formulation and execution of strategies formulated by the Board of Directors concerning the management and operational sustainability of the Company. In fulfilling its supervisory function, the Board of Commissioners collaborates with the Board of Directors based on the alignment of vision, mission, and shared objectives. In 2023, the Board of Directors formulated policies and implemented strategic measures in accordance with the shareholders’ aspirations, resolutions of the General Meeting of Shareholders (GMS), provisions in the Articles of Association, and applicable legal regulations.
In the context of the formulation and implementation of the 2023 strategy, the Board of Commissioners focused on several key aspects impacting the Company’s performance, including the measures taken by the Board of Directors in responding to the Holding Company’s standstill policy and the global macroeconomic conditions exerting pressure on the industry.
Equally important is the Board of Commissioners’ attention in 2023, which is focused on the transformation of human resources and the implementation of adequate corporate governance principles. Both aspects are considered as fundamental factors to be emphasized by the Company in achieving sustainable competitiveness and growth. The Board of Commissioners also acknowledges the steps taken by the Board of Directors in establishing a Transformation Office to build a more lean and agile Company operation.
The significance of risk management implementation in the Company is also a primary focus of the Board of Commissioners. Amidst uncertain conditions, the Board of Commissioners must ensure that every step taken by the Company throughout 2023 involves a comprehensive risk assessment process. Additionally, the Board of Commissioners places great emphasis on this aspect to ensure the smooth operation and sustainability of the Company.
The primary responsibility of the Board of Commissioners encompasses formulating advice and recommendations submitted by the Board of Directors regarding the Company’s management. The execution of such advice and recommendations occurs through two mechanisms, internal meetings of the Board of Commissioners and coordination meetings between the Board of Commissioners and the Board of Directors. Meanwhile, methods outside the Board of Commissioners’ meetings are implemented in a hybrid method or through digital platforms to address urgent issues and decisions that require prompt action. Recommendations from mechanisms outside meetings are subsequently reviewed and ratified through formal meetings. Discussions between the Board of Commissioners and the Board of Directors are not limited to formal meetings, but also also through interview methods to gain further insights from the Board of Directors regarding issues requiring special attention.
Throughout the 2023, the Board of Commissioners held 12 (twelve) internal meetings and 12 (twelve) joint meetings with the Board of Directors. Through these meetings, the Board of Commissioners conveyed recommendations, primarily related to changes in HR-related aspects, approval of the Transformation Office, conduct of the Annual General Meeting (AGM) and Extraordinary General Meeting (EGM), appointment of committee members, and other aspects related to the supervisory functions of the Board of Commissioners. All decisions and recommendations of the Board of Commissioners are formally documented through Board Resolutions.
In the execution of supervisory duties related to the implementation of good corporate governance principles, the Board of Commissioners receives support from two Committees, the Audit and Business Risk Committee, and the Nomination, Remuneration, and GCG Committee. Throughout 2023, the Board of Commissioners assessed that both Committees have made their best contributions in analyzing the Company’s challenges and recommending necessary steps.
The Audit and Business Risk Committee has been effectively carrying out its strategic responsibilities regarding the internal controls of the Company. This is evident through the evaluation of internal audit reports in accordance with regulations and GCG principles, including the implementation of the Whistleblowing System. The Audit and Business Risk Committee also provided recommendations regarding the review of financial information, risk management, and internal audit results by the Internal Audit Unit (SPI) and external audit by the Public Accountant Office (KAP).
Meanwhile, the Nomination, Remuneration, and GCG Committee have also effectively fulfilled their duties, particularly in identifying potential talents for the nomination process and sustaining leadership within the Company. The remuneration process for the Board of Commissioners and Directors has also been organized by the Nomination, Remuneration, and GCG Committee.
Overall, both supporting Committees of the Board of Commissioners have optimally performed their roles by conducting in-depth reviews of operational, financial, risk management, remuneration system, controls, and GCG implementation aspects in the Company. Positive findings should be maintained, while management attention should be transparently addressed and followed up in accordance with the guidance of the Board of Commissioners.
Amidst the global and national economic recovery trends post the Covid-19 pandemic, the Indonesian economy in 2024 is perceived to face several uncertainties. External factors, such as the ongoing Middle East geopolitical conflicts and the threat of climate change disrupting supply chains, contribute to this uncertainty. Additionally, inflation, interest rate hikes, and economic slowdowns in China, Europe, and the United States are expected to affect global economic growth. Overall, the predicted deceleration in global growth to 2.8% in 2023 is anticipated to accelerate to 3.0% in 2024. In line with this, international trade volume growth is projected to rebound to 3.5% next year.
Beyond these global conditions, domestically, challenges for the Indonesian economy in 2024 include export slowdowns, domestic interest rate hikes, depreciation of the rupiah, and the General Election celebration. In the Macroeconomic Framework and Fiscal Policy Highlights for 2024, the Government assumes economic growth of 5.3% to 5.7% for the year.
To anticipate of the varied forecasts for 2024, the Board of Commissioners embraces an optimistic outlook. A thorough assessment of the business prospects, as delineated in the 2024 RKAP by the Board of Directors, reveals that the formulated strategies are comprehensive, accounting for critical factors to the Company’s success in the upcoming year.
The Board of Commissioners envisions that the Company’s business growth will be well-maintained in 2024. The outcomes of transformation efforts are expected to become noticeable next year. With a leaner organizational system, the Company can continuously uphold operational efficiency and effectiveness, aiming for improved performance in the upcoming year.
One of the Board of Commissioners’ focal points is the aspect of corporate governance. The Board of Commissioners is dedicated to ensuring the implementation of high-quality governance at WIKA Beton, aligning with GCG principles while upholding the core values of AKHLAK. Throughout 2023, the Board of Commissioners actively monitored and provided advice on various management aspects, including risk management.
In its implementation, the Board of Commissioners consistently drives shareholder value enhancement, as reflected in the continuously improving GCG score. Following the issuance of the Ministry of State-Owned Enterprises Decision No. SK-12/S. MBU/08/2023 on August 16, 2023, revoking the Secretary Requirement for State-Owned Enterprises Ministry Decision No. SK-16/S.MBU/2012 regarding the Indicators/Parameters for the Assessment and Evaluation of the Implementation of Good Corporate Governance in State-Owned Enterprises, commonly used as a tool for assessment, the Company did not conduct a GCG assessment in 2023. Nevertheless, the self-assessment results carried out in 2022 remain a reference for evaluating the implementation of Good Corporate Governance. In 2022, the Company’s GCG evaluation, conducted through self-assessment, attained the “Very Good” predicate with a score of 90.75.
This year, the information disclosure in WIKA Beton’s Annual Report also incorporates aspects required by the General Guidelines of Indonesian Corporate Governance (PUGKI) and the ASEAN Corporate Governance Scorecard (ACGS). These efforts signify the Company’s commitment to further enhance governance and transparency for stakeholders.
The implementation of the Whistleblowing System (WBS) stands as an effective governance practice within the Company. Continual refinement is prioritized to identify and minimize potential occurrences of fraud, policy deviations, or internal violations. The Board of Commissioners plays a pivotal role in WBS implementation, overseeing not only its operational effectiveness but also actively participating in decision-making concerning incoming reports. Decision authority is centralized within the GCG Compliance Team.
Throughout 2023, the Company received no violation reports through WBS, underscoring the elevated importance placed on compliance by the entire WIKA Beton community. This achievement is attributed to regular WBS awareness campaigns aimed at enhancing employee understanding of policies, mechanisms, and procedures. The Board of Commissioners anticipates that this perspective will persist as a primary guide for the Company, ensuring the maintenance of high-performance credibility and integrity.
Conforming with the decision of the Annual General Meeting of Shareholders (AGM) for the Fiscal Year 2022 held on May 9, 2023, there has been a modification in the composition of the Company’s Board of Commissioners. The AGMS approved the honorable resignation of Mr. Harum Akhmad Zuhdi as the President Commissioner, Mr. Harno Trimadi as a Commissioner, and Mr. Dadan Tri Yudianto as an Independent Commissioner. This alteration is in compliance with the resolutions of the AGMS as ratified in the Deed of AGM Decision No. 10 dated May 9, 2023. Thus, as of December 31, 2023, the composition of the WIKA Beton Board of Commissioners is as follows:
With utmost respect, allow me to extend appreciation to Mr. Harum Akhmad Zuhdi, Mr. Harno Trimadi, and Mr. Dadan Tri Yudianto for their exceptional commitment dedicated to the Company. For the current members of the Board of Commissioners assuming their subsequent roles, duties will persist, and let us unite in the spirit of fostering sustainable growth for WIKA Beton.
In acknowledging the relentless acceleration of business dynamics, resilience and adaptivity are imperative traits that must define the character of WIKA Beton. Therefore, the Board of Commissioners expresses sincere appreciation to the robust leadership of the Board of Directors at the forefront, tirelessly striving for the optimal advancement of the Company’s sustainable growth.
Our gratitude is also extended to PT Wijaya Karya (Persero) Tbk, the Holding Company, showcasing increasing capabilities in facing challenges. Utmost accolades are conveyed to the Shareholders and other stakeholders who consistently provide guidance and trust to WIKA Beton.
The expertise, resilience, and capacities cultivated during this period serve as the key to reinforce quality and affirm sustainability. May the Almighty guide and empower WIKA Beton on its journey towards a future brimming with hope.
On Behalf of the Board of Commissioners,
Hermawan Dhewayanto
President Commissioner