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s the government is set to accelerate the development of infrastructure and telecommunications, investors have been advised to closely monitor a number of stocks related to construction and telecommunications next year as their investment options.

KDB Daewoo Securities research head Taye Shim said that builders had shown positive progress with 22,356 new contracts this year, a 10 percent increase from last year.

'€œUnlike developers, which are mostly affected by lower investor interest in houses and apartments, construction firms can always build other things, especially with the government'€™s ambitious infrastructure project until 2019,'€ Taye said recently.

According to National Planning Agency data, the government aims to construct an additional 8,200 kilometers worth of roads, 3,258 km new railroads, 172 new seaports, 15 new airports, new power plants, 90,000 new household gas networks and 28 dams by 2019.

KDB Daewoo data said contractors'€™ projects this year went to buildings (45.9 percent), followed by ports (21.3 percent), roads and bridges (18.7 percent), energy related infrastructure (12.2 percent ), with the remaining 1.9 percent having gone to irrigation and other construction work.

Credit Suisse also placed construction as the top market next year on account of the projected high government spending on the sector.

'€œThe catalyst for the sector can be the continued momentum on disbursements for new projects and tenders,'€ said Jahanzeb Naseer, the bank'€™s head of equity research for Indonesia.

The bank estimated state spending for infrastructure this year to grow 19 percent to Rp 250 trillion (US$18.2 billion), while for next year, the figure is expected to increase 21 percent to Rp 300 trillion.

Meanwhile, Bahana Securities rated the sector '€œneutral'€, saying that the main challenges would stem from cash flow management and securing financing, particularly owing to increased investment and
project sizes.

However, the company expected faster development prospects on toll roads as it saw improved land acquisition procedures, propelling the government'€™s plan to build highways. In addition, the government has also offered viability gap funding to attract investment in unfavorable toll road sections.

Securities companies also saw information and communications technology (ICT) as having huge potential sales growth on the back of high consumption in the country'€™s 250 million strong population.

Daewoo noted that ICT grew at around 11 percent this year.

According to the Indonesian Internet Service Providers Association (APJII), Indonesia had 88.1 million internet users in 2014, 39.4 percent of the total population. Of the figure, 85 percent of users accessed the internet through a smartphone. Within the next two years, internet penetration and smartphone users nationwide are forecast to hit 55 percent and 41 percent, respectively.

Meanwhile, Bahana expected continued improvement in the smartphone proportion, from 37 percent currently to 50 percent by 2017. '€œThis should have a positive impact on data usage as well as ARPU [Average Revenue per User],'€ Bahana'€™s head of research, Harry Su, said. (rbk)