Risk of interest rate increase
The increase in fluctuations of interest rates will not directly affect the company’s land and unitsales. The increase of bank loan interest rate will indirectly affect into the company’s sale of unit and land. With the high bank loan interest, it will reduce the customer’s purchasing power, due to the high amound of credit installment and lead to the increase of the interest fee expences paid by the company. The decline in sales would affect the company’s financial performance in both short and long term. In order to minimize the possible risk of loss, the company has appointed the Insurance company that has a good reputation
Risk of business competition
In this case, the company has the challenge to be more productive, innovative and creative without compromising quality. However, with the high level of competition among the middle segment, the company’s ability to offer products with attractive price will be reduced. This risk will affect the company’s sales and ability to sell the high quality product.
Risk of decrease in demand
With the company’s focus on the management of real estate business, the risk of market decline should be anticipated by the company. With the declining in the demand, the company will face the risk of declining in sales and operating income that will affect the performance of the company, so it can reduce the future development plans
Risk of government policy
Company’s legal risk is the disputes related to land ownership that may occur. Due to the land status of the company in the form of HGB (Building Rights Title) while the risk of government policy on regulatory changes regarding Environmental Impact Assessment (AMDAL), Environmental Monitoring Plan (RKL) and Environmental Monitoring Plan (RPL) and so on.
In order to minimize these risks, the company tried to comply with government policy both central and local government and maintain good relations with the local and central government. Thus, the company is expected to anticipate earlier in every changes on the government regulation that may occurs.
Risk of Delayed Project
Project delays can be caused by several things such as climate and weather, natural disasters, permitting delays, labor shortages and government policies. The delay of the construction will cause the delay on the customer’s payment and cancellation of purchase. The possibility of the delayed on the finishing of the project is un-avoidable, therefore the company also have a risk on degrading of their good reputation and will also disrupted the company’s operation. This will degrade the company’s reputation in the eyes of customers also the company’s operation would be disrupted.