Urbanisation and a growing population are driving demand
The economy has grown steadily since 2014, growing 5.2 percent in 2017 with 5.3 percent forecast for 2018. Public debt is relatively low and inflation moderate at around 4 percent. Governance is stable and political risk low. Stronger commodity prices should boost the value of exports and support growth.
Government efforts to improve infrastructure, logistics and low-cost housing are big drivers for construction, while rising domestic demand and lower interest rates are fuelling the private housing sector.
Public investment in 2017 of USD29bn was part of a plan to add 10.2km of bridges, 13 airports, 61 seaports, 710km of railway lines and 836km of highway to the country’s infrastructure network. In 2018, the budget is USD30.2bn. The government has plans to construct 856km of new roads and 7.86km of new bridges, plus revamping 46,000km of national road.
Rapidly rising living standards, urbanisation and a growing population are driving both demand for and concern over housing. A new affordable housing project in Jakarta worth USD450m will provide 8,000 apartments for low-income families.
|Market:||Staying the same|
|Cost escalation 2017–18:||7.5%|
|Cost escalation 2018–19:||7.5%|
|Location factor (USD):||41.2|
Indonesia is a leading investment destination in Asia. With annual population growth at about four million, construction will remain a key economic enabler. Expansion in roads and infrastructure is vital with annual new vehicle registration at almost one million. However, challenges exist. Skilled labour is a concern along with problems acquiring land and project delays.
(Data kindly supplied by Reynolds Partnership PT, Indonesia)
This content is part of the International construction market survey 2018