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Vol 39 No 3 (2024): September

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Apr 8, 2022
Accepted
Mar 15, 2024
Published
Sep 11, 2024
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The Effect of Government Policy on Infrastructure Priorities on the Profitability of Construction Companies in Indonesia 2011-2019

https://doi.org/10.22146/jieb.v39i3.4369
Ahmad Rifai
rifai.ap@gmail.com
Financial Education and Training Agency, Ministry of Finance, Indonesia, and School of Business, IPB University, Bogor, Indonesia
Tony Irawan
Faculty of Economics and Management, IPB University, Bogor, Indonesia
Dikky Indrawan
School of Business, IPB University, Bogor, Indonesia

Corresponding Author(s) : Ahmad Rifai

rifai.ap@gmail.com

Journal of Indonesian Economy and Business, Vol 39 No 3 (2024): September

Abstract

Introduction/Main Objective: The Indonesian government's policy of prioritizing the acceleration in infrastructure development will certainly have an impact on construction companies. Background of the Problem: This research aims to determine the influence of internal and external company factors on the profitability of companies in the building construction subsector. Novelty: This research analyzes the impact of increasing the government's infrastructure budget on the profitability of building construction subsector companies. Research Method: This research uses panel data regression analysis with annual financial report data from building construction subsector companies listed on the Indonesia Stock Exchange for the period from 2011 to 2019, which is divided into the period before the infrastructure sector became the focus of development (2011 to 2014) and after (2015 to 2019). Profitability is measured using the return on assets. The external factors are measured using the infrastructure budget and inflation, while the internal factors are measured using company size, liquidity, leverage, cash turnover, working capital turnover and receivables turnover. Findings/Results: This research concludes that the infrastructure budget, company size, and liquidity do not have a significant positive effect on company profitability, while inflation does not have a significant negative effect on profitability. Furthermore, cash turnover, working capital turnover, and account receivable turnover have a significant positive effect on profitability, while leverage has a significant negative effect on profitability. Conclusion: This research shows that companies should periodically review the impact of loans and always maintain the composition of their funding, according to their needs. Meanwhile, the government needs to evaluate the auction process, and sharpen its alternative infrastructure project funding strategies.

Keywords

building construction government policy infrastructure profitability ROA
Rifai, A., Irawan, T., & Indrawan, D. (2024). The Effect of Government Policy on Infrastructure Priorities on the Profitability of Construction Companies in Indonesia 2011-2019. Journal of Indonesian Economy and Business, 39(3), 308 -. https://doi.org/10.22146/jieb.v39i3.4369
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Author Biographies

Ahmad Rifai, Financial Education and Training Agency, Ministry of Finance, Indonesia, and School of Business, IPB University, Bogor, Indonesia

Ahmad Rifai is a Civil Servant (PNS) at the Financial Education and Training Agency, Ministry of Finance, Indonesia where he has been a civil servant since 2010. He obtained a Bachelor of Economics degree at the Faculty of Economics, Universitas Djuanda. He completed a master’s in management at Institut Pertanian Bogor, Indonesia. His research interests lie in the areas of human resource management, organizations and government, finance, and marketing. He has collaborated actively with other researchers from various fields in many research projects. He succeeded in publishing many articles in various top international journals.

Tony Irawan, Faculty of Economics and Management, IPB University, Bogor, Indonesia

Tony Irawan is a lecturer, secretary and researcher at the Department of Economics, Faculty of Economics and Management, IPB University, Indonesia where he has served as a lecturer since 2005. He obtained a bachelor’s degree in economics at Institut Pertanian Bogor, Indonesia. He completed a master’s in applied economics at The University of Adelaide, Australia. Additionally, he completed his Ph.D. from the University of Wuppertal, Germany. His research interests lie in the fields of applied economics, corporate finance, investment, and financial institutions. He has collaborated actively with other researchers from various fields in many research projects. He succeeded in publishing many articles in various well-known international journals.

Dikky Indrawan, School of Business, IPB University, Bogor, Indonesia

Dikky Indrawan is a lecturer at the Business School, IPB University, Indonesia where he has served as a lecturer since 2019. He obtained a bachelor’s degree in agriculture at Institut Pertanian Bogor, Indonesia. He completed a master’s in management at Institut Pertanian Bogor, Indonesia. Additionally, he completed his Ph.D. from Wageningen University, Netherlands. His research interests lie in the fields of marketing management, strategic management, partnerships, global value chains, and competitiveness. He has collaborated actively with other researchers from various fields in many research projects. He succeeded in publishing many articles in various well-known international journals.

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