Indonesia Construction Market - Growth, Trends, and Forecast (2019 - 2024)

Indonesia Construction Market - Segmented by (Commercial Constructions, Residential Constructions, Industrial Constructions, Infrastructure (Transportation Constructions)), and Energy and Utility Constructions - Growth, Trends, and Forecast (2019 - 2024)

Market Snapshot

CAGR Indonesia Construction
Study Period:

2015-2024

Base Year:

2018

CAGR:

6.7%

Key Players:

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Market Overview

Indonesia is known as the second most productive and profitable construction market in Asia, where a huge number of construction projects are undergoing in both residential as well as non-residential sectors. Due to the huge demand for residential properties and the growth of the property sector 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.

The construction sector is the third-largest contributor to the Indonesian economy, providing a total of Rp 1.65 trillion (USD 117 million) to GDP in 2018, representing a share of 11.1%, according to Statistics Indonesia (BPS). This places the sector behind only industry and trading, which represent 19.8% of GDP and 13% of GDP, respectively.

The country’s civil construction, covering all small- and large-scale infrastructure works was expected to expand by 4% in 2018 to reach a total value of Rp 293.83 billion (USD 20.8 million ), accounting for 65% of all construction activity, excluding oil- and gas-related construction. And the building construction – for both residential and industrial units – was expected to increase by 1%, to reach a total value of Rp 157.51 billion (USD 11.2million), accounting for 35% of construction activity for 2018.

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 Indonesia construction market covers the growing construction projects in different sectors, like commercial construction, residential construction, industrial construction, infrastructure (transportation construction), and energy and utility construction. Further, the construction market segmented into type of building construction like additions, demolition & new construction, and new construction. 

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

Govt's Ambitious Infrastructural Development Plans

Indonesia's economy has grown at an average of 5.1 percent over the last decade and is set to grow at an average of 5.7 percent in the upcoming years. Yet infrastructure development has lagged behind. Budgeted public infrastructure spending for 2019 is 420.5 trillion rupiahs (USD 28.8 billion), just 6 percent of the infrastructure deficit of USD 500 billion reported by the World Bank in 2017. More private sector involvement is thus expected as the government pushes ahead with its ambitious infrastructure development plans.

China's involvement is also expected to grow, with Jakarta having already partnered Beijing in awarding the USD  6 billion Jakarta-Bandung High-Speed rail project to Chinese investors.

Another trend in infrastructure development will be of greater geographical diversity. 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. Several planned projects within Jakarta’s latest round of negotiations with Beijing: four hydropower plants in North Kalimantan, as well as coal-fired power plants, industrial complexes, ports and other infrastructure in Central Kalimantan, North Sumatra, North Sulawesi and on the resort island of Bali.

Indonesia Infra Statista

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Growing Chinese FDIs into Indonesia's Real Estate and Construction Industry

 In October 2013, Chinese President Xi Jinping proposed the 21st century Maritime Silk Road for the first time in a speech made in Indonesia. Since then the Southeast Asian nation has embraced Chinese investment, with China Indonesia's third largest source of FDI. Some 2.3 billion U.S. dollars' worth of Chinese FDI has gone into projects including airports, industrial parks and a high-speed rail link between Jakarta and Bandung, where construction work got underway last month.

Investment over the past five years has seen China become the biggest source of foreign tourists for Indonesia, while bilateral trade in 2018 hit 72.6 billion U.S. dollars, a 23.5 percent jump in 2017.

Indonesia was second only to China in attracting private funds for infrastructure projects in 2017, mobilizing USD 15.4 billion in private investment for 11 projects that year. The Ministry of Public Works and Housing (MPWH) is the government agency responsible for the oversight of housing development, improvements to residential areas, social housing finance, and building arrangements. Of the Rp839trn USD 59.5 billion government budget for 2019, the MPWH was approved Rp 102 trillion (USD 7.2 billion), an increase from Rp 98.8 trillion (USD 7 billion) in 2017.

According to a report released by the Indonesia Investment Coordinating Board (BKPM) in 2018, around 70% of investments in housing projects, industrial estates and office space developments came from foreign companies operating in Indonesia. Such firms were also responsible for 77% of investments in hotels and restaurants.

Indonesia FDI Statista

Competitive Landscape

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

Major Players

  1. Chiyoda Corp.
  2. Toyo Construction Co., Ltd.
  3. TBEA Co. Ltd.
  4. Hyundai Engineering & Construction Co. Ltd.
  5. Wijaya Karya

* Complete list of players covered available in the table of contents below

Comp Landscape Indonesia

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, CONTRACTORS)

    1. 9.1 Existing Infrastructure

    2. 9.2 On-going Projects

    3. 9.3 Upcoming Projects

  11. 10. FUTURE OF CONSTRUCTION SECTOR IN INDONESIA

  12. 11. APPENDIX

  13. 12. DISCLAIMER

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