Our Esteemed Shareholders and Stakeholders,
On behalf of Board of Directors and management of PT Jasa Marga (Persero) Tbk. (“Jasa Marga” or the “Company”), we would praise the Almighty God for bringing the Company passing 2020 appropriately.
In this opportunity, allow us to present summary of the Company’s managerial activities done in 2020, specifically as part of the initiatives to achieve the Company’s vision to become “The Largest, Trusted and Sustainable Toll Road Company.”
Economics and Toll Road Industry Overview in 2020
COVID-19 pandemic has become a global issue in 2020. The global economy embraced enormous challenges following transmission of the virus, which was first discovered in Wuhan, China. The rapid spread with numberous victims led many countries to adopt lockdowns policy, both for city and national scale. As a result, the economic cycle had almost stopped.
Consquently, due to the pandemic, almost all countries experienced negative growth and many countries fell to economic recession. In the World Economy Outlook report released in October 2020, the International Monetary Fund (IMF) projected that global economic growth in 2020 will be -4.4%. Similar condition also occured in Indonesia. Since the first case was announced in early March 2020, the COVID-19 outbreak in Indonesia went very fast. Number of victims who have been confirmed positive and fatality rate were soaring. Therefore, the Government has implemented set of policies to deal with this pandemic, including issuance of a Government Regulation in lieu of Law No.1 of 2020 concerning State Financial Policy and Financial System Stability for Corona Virus Disease 2019 (COVID-19) Pandemic Handling and/or Emergency Response to National Economy and/or Financial System Stability Threats (Perppu 1/2020).
At regional level, to break the COVID-19 transmission, most regions have implemented the Large-Scale Social Restrictions (PSBB) policy. This condition resulted to decreasing economic activity and social mobility.
Although the Government has provided various stimulus to maintain the economic growth, both for the underprelived society, victims or the Micro, Small and Medium Enterprises (MSMEs), the national economy remained contracted and the national economic growth only achieved 2.07% in 2020.
The COVID-19 pandemic also had a great impact on the toll road industry. Implementation of the PSBB in various regions has significantly decreased the social mobility. Similarly, the goods and services trading also experienced a slowdown. This condition affected to decreasing vehicles volume passing the toll roads that resulting a decrease in revenues realization.
Considering the COVID-19 pandemic, implementation of land acquisition and construction project work also faced several constrained. The conditions were indicated by the delay in construction completion progress for Balikpapan-Samarinda, Manado-Bitung, as well as Jakarta Outer Ring Road 2 toll roads, including Kunciran-Cengkareng and Cinere-Serpong segments.
Strategy and Strategic Policy
To achieve our Vision and Mission, Jasa Marga will keep focusing our plan to drive transformation in 2020 tu run the effective and efficient line of business processes. Human Capital improvement becomes an important aspect in this transformation process.
In addition, capability development is continuously done amid the COVID-19 outbreak by utilizing technology through initiation of interactive learning programs via JM Talk online media and JM Click application. The organizational restructuring is carried out further in the subsidiaries by implementing concurrent position mechanism for the Board of Directors of the subsidiaries as well as administrative arrangements both in operational and support/back office units.
The Company also strives to improve service to our customers. In recent 2 years, Jasa Marga has committed to implement the more reliable toll road operation technology via PT Jasamarga Tollroad Operator (JMTO), our subsidiary in the toll road operation business line, by implementing cashless drive thru system using Single Lane Free Flow (SLFF) using Flo with barrier with the Radio Frequency Identification (RFID) technology with Let It Flo tagline and Automatic Vehicle Classification at several toll gates. This aims to speed up the duration thereby the Company can improve excellent service to our customers.
In order to maintain our position as the leader in the toll road industry, in 2020, the Company successfully operated a new toll road that spans 29.46 km including Manado Bitung toll road comprising of Manado to Kauditan Simpang Susun (20.5 km) toll road, Kauditan Simpang Susun toll road to the Danowudu Interchange (5.85 km), and Section 5 Pakis II Malang Pandaan toll road (3.11 km) and obtaining concession rights for a new toll road, which is Yogyakarta-Bawen Toll Road that spans 75.82 km.
Challenges and Issues and Settlement Plan
COVID-19 pandemic is the main challenge facing the Company in 2020. High transmission rate of COVID-19 encouraged the Government to enforce PSBB policy in several regions. The PSBB policy aims to limit occupancy of the office buildings maximum 50%, this condition directly affected the Company’s operational activity.
Facing these conditions, the Company adopted a policy to implement a Work From Home (WFH) work system. The company requires employees to continue to confirm attendance through the integrated Human Capital application, JM Click. In addition, by utilizing online meeting media, communication and information sharing and monitoring of work can still be carried out so that the work can be completed properly.
Meanwhile, for employees who have to carry out activities at the office, the Company enforces strict health protocols as recommended by the Government. Likewise with workers in the field, the Company also enforces strict health protocols so that employees avoid the spread of COVID-19.
In addition, with the increasing number of new toll roads operating in 2020, the Company's interest expense will also increase. On the other hand, the toll revenues generated on these new toll road sections are not yet optimal. Therefore, the Company strives to propose relaxation to banks, seek alternative funding that is most suitable to the Company's conditions, and conducts a review of the operating schedule for the new toll road tariff.
Jasa Marga Performance in 2020
During the pandemic era, Jasa Marga managed to record a good performance. Despite several challenges, in general, the Company's operational performance remained stable. The Company inaugurated the operations of 2 new toll roads, which are PandaanMalang Section 5 (Pakis-Malang) that spans 3.11 km and Manado-Bitung Section 1-2A (Manado-SS Danowudu) that spans 26.35 km, resulting the total length of operating toll roads reaching to 1,191 km.
In addition, the Company has also carried out the land acquisition stage for construction of ProbolinggoBanyuwangi section and has signed Construction Contract for Section 1 (Probolinggo-Besuki) which is divided into 3 packages with a total length of 29.60 km. The construction is planned to begin by end of December 2020. In addition to Probolinggo - Banyuwangi toll road, other toll roads under construction in 2020 are as follows:
- Cengkareng-Batuceper-Kunciran Section in Section 1 Kunciran-Tirtayasa, Section 2 Tirtayasa-B. Betawi, Section 3 B.Betawi-H. Sastranegara, and Section 4 H. Sastranegara-Benda.
- Serpong-Cinere Section in Section 1 Serpong Pamulang and Section 2 Pamulang-Cinere (Simpang Sebidang).
- The Jakarta-Cikampek II Selatan section in Package 3 (STA 34 + 150-STA 64 + 000).
- Manado Bitung Section in Section 2B: DanowuduBitung.
To deliver better service to customers, in 2020, Jasa Marga has also functionally operated new rest areas, including rest areas at KM 66 A and 66 B of PandaanMalang toll road, rest areas at KM 792 A and 792 B of Gempol- Pasuruan, as well as the rest areas at KM 36 A and KM 36 B of Balikpapan-Samarinda toll road. Maenwhile, the rest areas at KM 3 A and KM 3 B of Manado-Bitung toll road are under designing process.
In addition to our focus in developing toll road concession business, the Company also strive to develop toll road operations and other prospective bussinesses. In 2020, in terms of the toll road operation business sector, through our subsidiary, PT Jasamarga Tollroad Operator, the Company has sucessfully operated 1,517.16 km of toll roads consisting of 1,151.74 km of toll roads owned by Jasa Marga Group and 365.52 km toll roads owned by Non-Jasa Marga Group companies. In addition, in road maintenance operation business, through its subsidiary PT Jasamarga Tollroad Maintenance, the Company has successfully implemented road maintenance for 922.99 km roads. In terms of prospective business, through its subsidiary PT Jasamarga Related Business, the Company has successfully managed rest areas located in all Jasa Marga Group toll roads.
Financial wise, in 2020, the Company booked revenues of Rp9,587.7 billion. The revenues were mainly generated from toll road revenues of Rp8,763.0 billion or 91.4% contribution to total revenues.
Compared to the previous year, the Company's operating revenue was corrected by 12.71% due to the decrease in passing vehicles volume as following the PSBB policy in various regions.
On the other hand, along with operations of the new toll roads, the Company recorded a significant increase in the Interest Expense achieving Rp3,647.9 billion, increased by 49.9% or Rp1,214.2 billion from 2019.
The decrease in Operating Income and the increase in Interest Expenses significantly affected the Company's Net Profit achievement, where the Net Profit realization achieved Rp501.0 billion, decreased by 77.3% compared to the realization in 2019. In addition to Net Profit, the Company's EBITDA was also affected by the decrease in Operating Revenues, where EBITDA achieved Rp5,984.5 billion, decreased by 13% compared to the realization in 2019.
Comparison Between Target and Realization
In general, the Company’s performance in 2020 successfully achieved the targets set in Work and Budget Plan (RKAP) 2020. Based on the audited Management Report, realization of some business sectors is generally decreasing.
Key Performance Indicators (KPI) 2020 achievement realization for corporate level achieved 103% from 100% targeted. This was due to two performance aspects, which are financial and business development aspects. Based on financial performance aspect, the realization was driven by expense controlling through work program priority scheme to support EBITDA achievement. Based on business development performance aspect, the achievement was contributed form the non-toll road project progress and other business revenues with realization exceeding the target.
Jasa Marga’s Business Outlook
The global economic recovery due to the COVID-19 pandemic is considered smooth. In the World Economy Outlook report for October 2020, the International Monetary Fund (IMF) published a forecast that global economic growth will grow in 2021 approximately 5.2%. This project is considering faster economic recovery process in some developed countries since the third quarter of 2020. China, for example, in the third quarter of 2020 managed to record economic growth of 4.9% after experiencing negative growth of -6.8 % in the first quarter of 2020.
Indonesian economy also experienced similar condition. Bank Indonesia projected that Indonesia's economic growth in 2021 will achieve the range of 4.8%-5.8%. This prediction is considering the global economic recovery and fiscal stimulus provided by the Government as well as accommodative policies by Bank Indonesia (BI). In addition, Other supporting indicators are including higher human mobility in several regions and a higher retail sales record that indicate consumption confidence.
In 2021, the Company will focus to balance the growth and financial sustainability to build Jasa Marga's resilience. The Company plans to strengthen our financial structure by refinancing our subsidiary, toll road concession business line which has been fully operated and execution of both debt and equity corporate actions, which are considered the most suitable to conditions in 2021. Other initiatives that will be taken by the Company is by managing portfolio to optimize values and maintain our performance as a business group.
Corporate Governance Implementation
COVID-19 pandemic brought a priceless lesson for Jasa Marga, especially related to mitigation measures that have been prepared by the Company to deal with extraordinary events. The Company has conducted a comprehensive review on consequences of the pandemic. The pandemic conditions did not cause a signfiicant change in the Company’s key risks, howevver, the Company has also prepared mitigation measures to anticipate if any similar incident re-occur. The Company has made changes and improvements to work procedures and coordination with related parties.
Risk management becomes a part of implementation of Good Corporate Governance (GCG) principles, such as transparency, accountability, responsibility, independence and fairness. Jasa Marga is committed to manifest the Good Corporate Governance (GCG) principles as an integrated part of the Company's operational activities. In 2020, the Company has updated several Good Corporate Governance (GCG) soft structures, including Code of Conduct, Code of Corporate Governance, Conflicts of Interest Manual, Gratification Policy, and Whistleblowing System. This initiative is done not only to ensure that GCG implementation within Jasa Marga has complied to the prevailing laws and regulations, but also becomes an effort the Company does to continuously improve the quality of the implementation of Good Corporate Governance (GCG).
In addition, to measure effectiveness and suitability of Good Corporate Governance (GCG) implementation within the Company, Jasa Marga also regularly conducts Good Corporate Governance (GCG) assessments as part of the check and balances mechanism. Achievement of the activities can be measured through the assessment and also to prepare further plans to improve performance of certain activities.
In 2020, the Good Corporate Governance (GCG) assessment was carried out by PT Sinergi Daya Prima using the assessment parameters by the Ministry of SOEs, which is SK-16/S.MBU/2012 dated June 6, 2012 concerning Indicators/Parameters for Good Corporate Governance Implementation Assessment and Evaluation in State-Owned Enterprises. Based on results of the assessment, Jasa Marga received a score of “98.00” with the predicate “Very Good”. This achievement is higher/lower than the results achieved in the previous year's assessment, where Jasa Marga achieved a score of "98.06" with "Very Good" predicate.
Assessment on Performance of Committees under Board of Directors and the Assessment Framework
In order to support implementation of our duties and responsibilities, the Board of Directors has established 2 (two) committees with scope of responsibility for specific field, which are Risk Management Committee and Information Technology Steering Committee. Both committees are in charge to review and provide recommendation related to each scope of duties for current and future conditions.
In 2020, the Risk Management Committee has carried out its duty through several meetings with agenda including review on Company’s risk management policy and strategic team, corporate risk profile monitoring, risk management plan monitoring, discussion on corporate action/strategic plan and evaluation on integrated corporate risk management maturity level assessment. The Risk Management Committee also has provided direction for emergency procedure, work plan and mitigation for state of emergency during the COVID-19 pandemic.
On the other hand, the IT Steering Committee has provided direction related to Information Technology Development, both in terms of IT Enterprise and IT Business. Jasa Marga is currently supported by Internet of Things (IoT) laboratory that is functioned as a unit who engages in IT-related research and development intended to enrich Jasa Marga’s internal competency such as Single Lane Free Flow (SLFF), Electronic Toll Collection (ETC), Intelligent Transportation System (ITS) and Automatic Vehicle Classification (AVC).
In addition, related to the COVID-19 pandemic occurred throughout 2020, the Information Technology Steering Committee has also provided directions related to Information Technology in facilitating the employees to work from home and using Virtual Private Network (VPN) to minimize the COVID-19 transmission and maintain the Company’s smooth business operation.
The Board of Directors assessed that, throughout 2020, the Risk Management Committee and Information Technology Steering Committee have carried out their duties and responsibilities very well.
Change in Board of Directors Composition
In 2020, there is a change in Jasa Marga’s Board of Directors composition acording to resolutions of the Annual General Meetings of Shareholders held on June 11, 2020. With consensus, the Shareholders officiated resignation of Mr. Alex Denni as Human Capital and Transformation Director following his new assignment as Deputy to the Minister of SOEs for HR affairs effective as per March 3, 2020. Also with consensus, the Shareholders honorary dismissed Mrs. Desi Arryani as President Director and Mr. Adrian Priohutomo as Business Development Director.
In addition, with consensus, the Shareholders also transferred assignment of Mr. Subakti Syukur from previously was assigned as Operations Director to President Director, and appointed Mr. Arsal Ismail as Business Development Director, Mr. Enkky Sasono Anas Wijaya as Human Capital and Transformation Director and Mrs. Fitri Wiyanti as Operations Director. Therefore, as December 31, 2020, composition of Jasa Marga’s Director is as follows:
|President Director||:||Subakti Syukur|
|Finance Director||:||Donny Arsal|
|Business Director||:||Mohammad Sofyan|
|Business Development Director||:||Arsal Ismail|
|Human Capital and Transformation Director||:||Enkky Sasono Anas Wijaya|
|Operations Director||:||Fitri Wiyanti|
On behalf of the Company, we would thank Mrs. Dessy Arryani, Mr. Alex Denni and Mr. Adrian Priohutomo for their dedications during their terms as the Board of Directors members.
Considering the Company’s achievement throughout 2020, on behalf of Board of Directors, allow us to expreess our gratitude to the Almighty God for smooth operational and business journeys embraced by the Company. The Board of Directors would also thank our Shareholders and investors for their trusts. The Board of Directors would also adress our graittude and appreciation to the Board of Commissioners for the direction and strategic partnership over the Company’s operational and business management. To the regulator, our customers, suppliers and business partners, the Board of Directors would also thank for the good cooperation.
To all of Jasa Marga personnel, the Board of Directors would extend our utmost appreciation for your dedication and perseverance throughout the challenging 2020. All of the hard and smart works will become the foundation for the Company to optimize our strength and achieve excellent performance in the future.
Jakarta, May 5, 2021
On behalf of the Board of Directors