Summary
Indonesia Construction Market Size, Trend Analysis by Sector (Commercial, Industrial, Infrastructure, Energy and Utilities, Institutional and Residential) and Forecast, 2023-2027
Summary
The analyst expects the growth of the construction industry of Indonesia to slow in 2023, owing to elevated inflation, energy prices and construction costs, coupled with the tightening of monetary policy. In 2023, the construction industry is expected to register a growth of 1.2% in real terms, down from the growth of 2% recorded in 2022. According to Bank Indonesia, inflation rose to 5.5% in December 2022, up from 4.4% in June and 2.2% in January 2022. According to the International Monetary Fund (IMF), Indonesia’s debt ratio against GDP was 42.7% in 2022. Thus, to control inflationary pressure, the Bank of Indonesia increased the interest rate by 25 basis points from 5.50% in December 2022 to 5.75% in January 2023, marking a continuation of its tightening cycle and bringing the total increase in rates to 225 basis point since August 2022. On a positive note, however, the government’s emphasis on maintaining bilateral and multilateral agreements, and trade policies with its trading partners will create favorable conditions for economic and industry growth this year. According to the Ministry of Investment, foreign direct investment (FDI) in the country rose by 44.2% year on year (YoY) in 2022
Over the remainder of the forecast period, from 2024 to 2027, the Indonesian construction industry is expected to register an annual average growth of 5.9%, supported by investment as part of the 2020–24 National Medium-Term Development Plan (RPJMN) and the Electricity Procurement Plan (RUPTL) 2021–30. Under the RUPTL plan, the government plans to add 40.6GW of additional capacity by 2030, of which 4.7GW will be solar and 51.6% of capacity will be from renewable sources. Moreover, the government’s 2020 plan to invest IDR6.2 quadrillion ($406.1 billion) on infrastructure projects by 2024 will also bolster activity in the construction industry. Furthermore, the Minister for the Economy reported in February 2022 that construction on 208 projects and 10 programs of the National Strategic Projects (PSN) are scheduled to be completed in the third quarter of 2024. The PSN involves a combined investment of IDR5.7 quadrillion ($373.4 billion), and includes 56 roads, 57 dams,16 railways, 16 ports, as well as 15 energy, 12 water and sanitation, nine irrigation, eight airport and two housing estate projects, among others.
This report provides detailed market analysis, information and insights into the Indonesian construction industry, including -
- The Indonesian construction industry’s growth prospects by market, project type and construction activity
- Critical insight into the impact of industry trends and issues, as well as an analysis of key risks and opportunities in the Indonesian construction industry
- Analysis of the mega-project pipeline, focusing on development stages and participants, in addition to listings of major projects in the pipeline.
Scope
This report provides a comprehensive analysis of the construction industry in Indonesia.
It provides -
- Historical (2018–2022) and forecast (2023–2027) valuations of the construction industry in Indonesia, featuring details of key growth drivers.
- Segmentation by sector (commercial, industrial, infrastructure, energy and utilities, institutional and residential) and by sub-sector
- Analysis of the mega-project pipeline, including breakdowns by development stage across all sectors, and projected spending on projects in the existing pipeline.
- Listings of major projects, in addition to details of leading contractors and consultants
Reasons to Buy
- Identify and evaluate market opportunities using standardized valuation and forecasting methodologies.
- Assess market growth potential at a micro-level with over 600 time-series data forecasts.
- Understand the latest industry and market trends.
- Formulate and validate strategy using critical and actionable insight.
- Assess business risks, including cost, regulatory and competitive pressures.
- Evaluate competitive risk and success factors.
