Indonesia Construction Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)

The Indonesia Construction Market is segmented by Sector (Commercial, Residential, Industrial, Infrastructure (Transportation Constructions), and Energy and Utility Constructions and Construction Type (Additions, Demolition and New Construction, and New Constructions).

Market Snapshot

Indonesia Construction Market Overview
Study Period: 2017- 2026
Base Year: 2020
CAGR: >4 %

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Market Overview

The Indonesia Construction market is expected to witness a CAGR of 4% during the forecasted period. In 2019, there were approximately 169 thousand construction establishments active in Indonesia. Indonesia's construction industry was experiencing increased growth due to increases in infrastructure construction.

In 2020, however, large-scale social restrictions (PSBB) imposed by the government to contain the spread of COVID-19 and the global travel restrictions had affected the availability of manpower and raw materials, thereby weighing on the Indonesian construction industry's growth in the first half of 2020.

The industry has been impacted by the delays in project implementation and the re-allocation of part of the government's budget towards its fight against COVID-19. The government re-allocated 20.4% of its 2020 budget - USD 1.7 billion - to COVID-19 relief measures.

Indonesia is known as the second most productive and profitable construction market in Asia, where many construction projects are undergoing in both residential and non-residential sectors. Due to the huge demand for residential properties and the property sector's growth in major cities around the country. The public works investment is a key point in the government’s plan to provide water resources, roads, and human settlement infrastructure for long-term development.

Indonesia's receptive stance towards China's Belt and Road Initiative (BRI) will be a boon to its construction industry over the next decade and help sustain the current rapid pace of development. Private and foreign capital is crucial in bridging the country's widening infrastructure gap.

Scope of the Report

The construction market includes a wide range activity that covers upcoming, ongoing, and growing construction projects in different sectors, which include but not limited to geotechnical (underground structures) and superstructures in residential, commercial, and industrial structures as well as infrastructure construction (like roads, railways, and airports) and power generation and transmission related infrastructure.

The report offers a complete background analysis of the construction industry, including an assessment and contribution of the sector in the economy, market overview, market size estimation for key segments, emerging trends in the market segments, market dynamics, etc. The report also covers the impact of COVID-19 on the market.

The Indonesian construction market is segmented by sector (commercial, residential, industrial, infrastructure (transportation constructions), and energy and utility constructions and construction type (additions, demolition and new construction, and new constructions).

BY SECTOR
Commercial Construction
Residential Construction
Industrial Construction
Infrastructure (Transportation) Construction
Energy and Utilities Construction
BY CONSTRUCTION TYPE
Additions
Demolition and New Construction
New Constructions

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Key Market Trends

Government's Ambitious Infrastructural Development Plans

The industry's growth is expected to be supported by the government's focus on infrastructure development to revive the country's economy.

In late September 2020, the Indonesian Parliament approved the USD 185.3 billion draft budget for 2021. Of the total, it allocated USD 29 billion towards infrastructure development, which will mainly focus on reviving the economy, providing basic services, and improving connectivity.

The government had a plan to begin infrastructure work related to the USD 33 billion capital city relocation project in 2021, but in September 2020, the National Development Planning Agency (Bappenas) announced that the project had been formally put on hold due to the economic impact of the pandemic. Although construction has been suspended, the government will continue to move ahead with its planning, with infrastructure work expected to commence in 2022 or 2023.

The Indonesian construction industry is expected to stabilize and record growth between 2021-2024, supported by infrastructure investments under the National Medium-Term Development Plan. The plan is to invest IDR6 quadrillion (USD 412 billion) in the development of transport, industrial, energy, and housing infrastructure projects over the next four years.

Although construction activity in recent years has been concentrated in Jakarta and the surrounding provinces of Banten and West Java, the Jokowi administration is aiming to decentralize business activity away from Java.

Indonesia Construction Market Trends

Millennials will Drive Demand for Indonesia’s Residential Construction Sector

According to Indonesia’s Central Bureau of Statistics (BPS), about 50% of the total population in 2019 was at the working age of between 20 and 54 years old, of which 84 million were millennials with significant purchasing power. Millennials represent a large proportion of the overall consumer market, and their impact on the economy and the property market is huge.

Residential housing is an important market segment in Indonesia and millennials are a vital demand source. Developers are targeting this demographic segment and adjusting their sales processes, especially in the wake of COVID-19.

More than 4,800 landed houses were launched for sale alone in Greater Jakarta or JaBoDeTaBek (Jakarta, Bogor, Depok, Tangerang, and Bekasi) in 2Q 2020. It was around 26.3% more than new launches in 4Q 2019. In 2Q 2020, almost half of the units sold had an estimated average price between IDR 600 million and 1.3 billion (approximately USD 40,000 to 88,000), which is relatively affordable for some millennials.

Indonesia Construction Market Growth

Competitive Landscape

The Indonesian construction market is less competitive, with the presence of major local and international players. The Indonesian construction market presents opportunities for growth during the forecast period, which is expected to further drive market competition. The market is fragmented, as many new entrants are eyeing to bag projects to strengthening their positions among the top players.

Recent Developments

April 2020: The Ministry of Public Works and Public Housing (PUPR) offered construction projects of five toll roads and a bridge worth trillions to investors. The six projects offered are the Semanan-Balaraja toll road construction, with investment totaling IDR 15.52 trillion; Cikunir-Ulujami toll road worth IDR 15.52 trillion; Sentul Selatan-Karawang Barat toll road, with a total investment of IDR 15.37 trillion; Patimban toll road worth IDR 7.52 trillion; Semarang Harbour toll road worth IDR 11.76 trillion; and a bridge connecting the islands of Batam and Bintan, with investment amounting to IDR 8.77 trillion.

September 2020: Government plans to spend IDR 417.8 trillion on infrastructure construction in 2021. By enhancing digital infrastructure and increasing logistical efficiency and connection, the infrastructure development policy for 2021 is sustainable development following the COVID-19 pandemic. According to the Ministry of Finance's 2021 strategic output target, the government plans to build 965.4 km of roads, 26.9 km of bridges, 446.56 km of railway tracks, and 10 airports in 2021.

Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Scope of the Market

    2. 1.2 Market Definition

    3. 1.3 Executive Summary

  2. 2. RESEARCH METHODOLOGY

    1. 2.1 Study Deliverables

    2. 2.2 Study Assumptions

    3. 2.3 Analysis Methodology

    4. 2.4 Research Phases

  3. 3. MARKET INSIGHTS

    1. 3.1 Current Economic and Construction Market Scenario

    2. 3.2 Technological Innovations in the Construction Sector

    3. 3.3 Impact of Government Regulations and Initiatives on the Industry

    4. 3.4 Review and Commentary on the Extent of "The Chinese Belt and Road Initiative"

    5. 3.5 Comparison of Key Industry Metrics of Indonesia with Other ASEAN Member Countries (Analyst View)

    6. 3.6 Comparison of Construction Cost Metrics of Indonesia with Other ASEAN Member Countries (Analyst View)

  4. 4. MARKET DYNAMICS

    1. 4.1 Drivers

    2. 4.2 Restraints

    3. 4.3 Opportunities

    4. 4.4 Porter's Five Forces Analysis

    5. 4.5 Industry Value Chain Analysis

  5. 5. MARKET SEGMENTATION

    1. 5.1 BY SECTOR

      1. 5.1.1 Commercial Construction

      2. 5.1.2 Residential Construction

      3. 5.1.3 Industrial Construction

      4. 5.1.4 Infrastructure (Transportation) Construction

      5. 5.1.5 Energy and Utilities Construction

    2. 5.2 BY CONSTRUCTION TYPE

      1. 5.2.1 Additions

      2. 5.2.2 Demolition and New Construction

      3. 5.2.3 New Constructions

  6. 6. COMPETITIVE LANDSCAPE

    1. 6.1 Market Concentration Overview

    2. 6.2 Strategies Adopted by Major Players

  7. 7. COMPANY PROFILES

    1. 7.1 Chiyoda Corp.

    2. 7.2 Toyo Construction Co. Ltd

    3. 7.3 TBEA Co. Ltd

    4. 7.4 Hyundai Engineering & Construction Co. Ltd

    5. 7.5 Samsung C&T and Corporation

    6. 7.6 McConnell Dowell

    7. 7.7 Adhi Karya

    8. 7.8 PT PP (Persero)

    9. 7.9 Wijaya Karya

    10. 7.10 Waskita Karya

    11. 7.11 PT Jaya Konstruksi Manggala Pratama*

  8. *List Not Exhaustive
  9. 8. INVESTMENT ANALYSIS

  10. 9. MAJOR INFRASTRUCTURE DEVELOPMENT PROJECTS (PROJECT DESCRIPTION, VALUE, LOCATION, SECTOR, AND CONTRACTORS)

    1. 9.1 Existing Infrastructure

    2. 9.2 On-going Projects

    3. 9.3 Upcoming Projects

  11. 10. FUTURE OF THE CONSTRUCTION SECTOR IN INDONESIA

  12. 11. APPENDIX

  13. 12. DISCLAIMER

**Subject to Availability

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Frequently Asked Questions

The Indonesia Construction Market market is studied from 2017 - 2026.

The Indonesia Construction Market is growing at a CAGR of >4% over the next 5 years.

Chiyoda Corp., Toyo Construction Co., Ltd., TBEA Co. Ltd., Hyundai Engineering & Construction Co. Ltd., Wijaya Karya are the major companies operating in Indonesia Construction Market.

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