CIC - Construction Intelligence Center

Construction growth in Indonesia to remain high over the next five years

3 Jul 2017

Indonesia’s construction industry will continue to thrive over the forecast period (2017–2021), driven by investment in infrastructure, energy and residential projects, according to the latest report from Timetric’s Construction Intelligence Center (CIC).


The construction industry’s output grew by 6.2% in 2016 in real terms, following an average annual growth of 6.6% during the preceding four years. Over the past five years, growth has been supported by favorable demographics, and public and private sector investment in infrastructure and residential construction projects, leading to an increase in demand for the construction industry. Government investments under the National Medium Term Development Plan 2010–2014 to develop the country’s infrastructure also supported growth during this period.


Focus on the development of transport infrastructure and the construction of affordable housing units will be key growth drivers during the forecast period. Industry growth will also be supported by the Development Program 2015–2019, under which the government aims to develop the country’s transport infrastructure. 


To improve the country's infrastructure, reduce logistics costs and enhance connectivity in Southeast Asia's largest economy, the government is focused more on the expansion of the country’s rail, road, harbors, airports and other core transport infrastructure. Accordingly, in its 2017 budget, the government increased expenditure on infrastructure development by 22.1%, going from IDR317.1 trillion (US$24.0 billion) in the 2016 budget to IDR387.3 trillion (US$29.3 billion) in the 2017 budget. Of the total budget spending on infrastructure, IDR377.8 trillion (US$28.6 billion) will be spent on hard infrastructure, IDR5.5 trillion (US$415.9 million) on social infrastructure and IDR4.1 trillion (US$310.1 million) on supportive infrastructure. This will contribute to the continued expansion of infrastructure construction over the forecast period.


There will be some challenges over the coming five years, notably related to land acquisition problems and project delays, but the overall construction industry’s output value in real terms is expected to record annual average growth of 7.7% over the forecast period. 

Indonesia construction ouput


About this report


This information is taken from the Timetric report: ‘Construction in Indonesia – Key Trends and Opportunities to 2021’


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