Market Trends of Indonesia Infrastructure Sector Industry
Increase in Value of Civil Construction
- The building industry is the fourth-largest contributor to Indonesia's GDP. Among all Asian countries, Indonesia has some of the highest levels of construction investment. The government's goal of building the archipelago's infrastructure to improve connection has helped the business thrive.Java Island, Indonesia's most populous island and the location of its capital city, Jakarta, has been the center of the country's infrastructural development over the past several decades.
- Despite the expansion of neighboring islands, the total value of its completed development projects is still more than 40 times greater than that of Bali and 30 times greater than that of Papua. The Indonesian government has been constructing toll roads nationwide to lessen development disparities. The Trans-Sumatra Toll Road, Indonesia's greatest infrastructure project, connects the northern and southern halves of Sumatra, the second-largest island in the archipelago and the sixth-largest island in the world.
- Over 80% of Indonesia's construction businesses are small businesses that depend primarily on local labor. The majority of Indonesia's construction employees are located in West Java. Finding a permanent construction job in Indonesia is still uncommon because most workers are contracted day laborers who lack credentials and formal education. The Indonesian government has assisted these workers in getting the formal certification required to advance their careers in recent years.
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Government's Infrastructural Development Plans
- Increased geographical diversity is likely an emerging trend in developing infrastructure in Indonesia. Although construction activity in recent years has been concentrated in Jakarta and the surrounding provinces of Banten and West Java, the Jokowi administration aims to decentralize business activity away from Java. Many projects were proposed in the latest round of talks with Beijing in Jakarta, including four hydropower plants in North Kalimantan and coal-fired power plants, industrial parks, ports, and other facilities in Central Kalimantan, North Sumatra, North Sulawesi, and on the Bali resort island.
- The Indonesian government has charged its state-owned business Pelindo II with creating and running an expansion of the current Tanjung Priok harbor in North Jakarta, Indonesia's main commercial port, to improve the quality and quantity of its infrastructure. This new port, which will operate as a port of the highest caliber, will be named New Priok Port or Kalibaru Port. The project began in 2012 and is estimated to be completed by the end of the current year. The Indonesian government allotted around IDR 365.8 trillion (USD 26.5 billion) for infrastructure in 2022, a decline of more than IDR 50 trillion (USD 0.32 billion). The total cost of finished civil construction in Indonesia was IDR 752.7 trillion (USD 90.89 billion) 2020.
