Indonesia Construction Industry Size & Share Analysis - Growth Trends & Forecasts (2025 - 2030)

Indonesia Construction Market Size

The Indonesia Construction Market size is estimated at USD 305.48 billion in 2025, and is expected to reach USD 438.56 billion by 2030, at a CAGR of 7.5% during the forecast period (2025-2030).

Indonesia's construction sector is experiencing significant transformation driven by substantial government investment and international partnerships. The most notable development came in December 2023 when the US and Indonesian governments established a landmark USD 649 million investment through the Millennium Challenge Corporation's Infrastructure and Finance Compact, specifically targeting transport and logistics infrastructure construction enhancement. This initiative demonstrates the government's commitment to addressing critical growth challenges, particularly in infrastructure financing and revenue intermediation. The partnership aims to create a more robust framework for infrastructure construction development while simultaneously supporting micro, small, and medium-sized enterprises.

The infrastructure landscape continues to evolve with comprehensive development plans across multiple sectors. The government has outlined ambitious infrastructure construction development initiatives primarily driven by transport and WASH (waste treatment, water supply) sectors. These developments are complemented by growing international interest in large renewable energy projects, particularly for potential export to neighboring countries like Singapore. The scale of this commitment is evidenced by the government's planned investment of IDR 571 trillion in transport construction infrastructure development in Jakarta alone, encompassing various projects including light transit railway corridors and integrated transportation networks.

The residential construction sector has witnessed significant policy reforms aimed at stimulating market growth and accessibility. In 2023, the Indonesian government implemented crucial measures to boost the real estate market, including revisions to the value-added tax structure and introducing an IDR 4 million administration fee for low-income home buyers. These initiatives are designed to address the growing demand for real estate construction driven by rapid urbanization and an expanding middle class, while ensuring housing remains accessible to various income segments of the population.

The construction industry's competitive landscape is characterized by strong international participation and strategic partnerships. Foreign contractors maintain a dominant position in the project pipeline, accounting for 74% of projects by value, with Japanese firms leading the foreign contractor segment with a 25% share of awarded contracts. This international presence has fostered knowledge transfer and technological advancement within the sector, while state-controlled companies continue to play a crucial role in maintaining domestic industry interests. The industry structure promotes a balanced approach between foreign expertise and local industry development, creating a dynamic and competitive building and construction market environment.

Indonesia Construction Market Trends

Infrastructure Development Projects Driving Market Growth

The Indonesian construction market is experiencing substantial momentum driven by major infrastructure development initiatives across multiple sectors. The government has demonstrated strong commitment by allocating its largest infrastructure budget in five years, with IDR 422.7 trillion (USD 27.01 billion) designated for construction projects in 2024, representing a 5.8% increase from the 2023 infrastructure budget. This unprecedented investment is facilitating the development of transport infrastructure, industrial facilities, and critical utility projects that are transforming Indonesia's built environment.

The scope of infrastructure development encompasses various strategic projects, including the development of water supply facilities through public-private partnerships (PPP) in West Java province. Notable projects include the Jatigede water supply PPP, which involves constructing a water treatment facility with a 1,500 liters per second capacity serving multiple regencies. Additionally, significant investments are being made in renewable energy infrastructure, exemplified by the partnership between Quantum Power Asia and German developer IB Vogt to construct a USD 5 billion solar power and storage facility in Indonesia's Riau Islands, which will generate over 3.5 GW of solar power with 12 GWh energy storage capacity.

Government Initiatives and Public-Private Partnerships

The Indonesian government's proactive approach to infrastructure development is manifested through various strategic initiatives and partnerships that are catalyzing construction market growth. The recent Indonesia Incorporated Day event in January 2024 demonstrates the government's commitment to fostering collaboration between public entities, private sector players, and state-owned enterprises (SOEs) to achieve national development goals. This integrated approach has resulted in more than 50% of construction roles being awarded to established Indonesian SOEs, including major players like Wijaya Karya, Adhi Karya, Waskita Karya, and Pembangunan Perumahan.

The government's National Medium-Term Development Plan (2020-2024 RPJMN) represents a cornerstone initiative, with plans to invest IDR 6 quadrillion (USD 412 billion) in developing transport, industrial, energy, and housing infrastructure projects by 2024. This comprehensive development framework is complemented by specific project initiatives, such as the Islamic Development Bank's commitment to provide USD 150 million for the Trans South-South Road Infrastructure Phase 2 (TRSS-2), which includes the construction of a 68 km tolled facility and a 443-meter bridge across multiple districts.

Industrial and Commercial Construction Expansion

Indonesia's construction market is experiencing significant growth driven by expanding industrial and commercial construction activities, particularly in the technology and data center sectors. The country is positioned to overtake Singapore as Southeast Asia's second-largest public cloud market, attracting major global cloud providers including Google Cloud, AWS, Microsoft Azure, and Alibaba Cloud. This technological expansion is exemplified by Equinix's planned USD 74 million investment to establish its International Business Exchange (IBX) data center in Jakarta, which will enhance the country's digital infrastructure capabilities.

The industrial construction sector is further energized by the relocation of manufacturing facilities to Indonesia, particularly in strategic locations like the Batang industrial estate. The development of industrial parks and specialized facilities is creating substantial construction opportunities, with projects such as energy-intensive refineries and smelters being established to support the country's natural resource processing capabilities. This industrial expansion is supported by complementary infrastructure development, including the Trans Java Toll Road connecting industrial zones to key container ports, and the planned integration of railway connections by Kereta Api Indonesia (KAI) to enhance logistics capabilities.

Segment Analysis: By Sector

Infrastructure Segment in Indonesia Construction Market

The infrastructure construction segment continues to dominate the Indonesia construction market, holding approximately 35% market share in 2024, with a value of USD 100.35 billion. This significant market position is primarily driven by the government's ongoing commitment to major infrastructure development projects, including roads, railways, airports, and seaports. The segment's strength is further reinforced by substantial investments in transportation infrastructure, particularly in Jakarta's development plans and the ambitious relocation project of the country's capital city to East Kalimantan. The infrastructure segment's dominance is also supported by various public-private partnership (PPP) initiatives and international collaborations, especially in developing sustainable transportation networks and urban infrastructure systems across the archipelago.

Industrial Construction Segment in Indonesia Construction Market

The industrial construction segment is emerging as the fastest-growing sector in Indonesia's construction market, projected to grow at approximately 9% during 2024-2029. This remarkable growth is primarily driven by increasing investments in manufacturing facilities, particularly in the electric vehicle (EV) battery sector, where Indonesia plans to establish itself as a major global player. The segment's expansion is further supported by the development of new industrial parks, particularly in regions like Batang and East Kalimantan, which are attracting significant foreign investment. The growth is also bolstered by the government's push for industrial diversification and the increasing number of international companies establishing manufacturing bases in Indonesia, particularly in sectors such as electronics, automotive, and renewable energy.

Remaining Segments in Indonesia Construction Market

The residential construction, commercial construction, and energy & utilities construction segments each play vital roles in shaping Indonesia's construction market landscape. The residential construction segment is driven by the country's growing urban population and government housing initiatives, while the commercial construction sector is expanding through office spaces, retail developments, and healthcare facilities. The energy & utilities segment remains crucial for Indonesia's infrastructure development, focusing on power plants, transmission networks, and renewable energy facilities. These segments are benefiting from urbanization trends, rising foreign direct investment, and the government's commitment to improving public infrastructure and services across the archipelago.