Sector

Construction

As of 2022, Indonesia’s population stands at 275.8 million, a 1.17 percent growth from 272.7 million in 2021. With such a large population, Indonesia exhibits an exceptionally high demand for construction services. The total value of completed construction work in 2022 reached US$98.3 billion, with US$56.26 billion attributed to civil construction, US$32.87 billion to building construction, and the remaining US$9.17 billion to special construction work.

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Construction

As of 2022, Indonesia’s population stands at 275.8 million, a 1.17 percent growth from 272.7 million in 2021. With such a large population, Indonesia exhibits an exceptionally high demand for construction services. The total value of completed construction work in 2022 reached US$98.3 billion, with US$56.26 billion attributed to civil construction, US$32.87 billion to building construction, and the remaining US$9.17 billion to special construction work.

Subsequently, Indonesia’s construction sector has experienced accelerated growth. In 2023, its gross domestic product (GDP) reached US$133.7 billion with an annual growth rate of 4.91 percent – more than double the rate of 2022, which stood at 2.01 percent. The sector’s stable growth in 2023 is further reflected on a quarter-basis; from Q2 to Q3, the construction sector grew by 5.87 percent, and from Q3 to Q4, it grew by 5.84 percent.

The prospects of the construction sector are on the rise as the price of construction materials stabilized around 2023 following the end of the pandemic. Notably, the price index for the construction of public facilities, buildings, roads, and bridges recorded a 0.17 deflation from November to December 2023, leading to a slight deflation of 0.08 percent on the price index for construction.

The construction sector has also been seeing increasing interest from foreign investors. Throughout 2023, total foreign direct investment (FDI) that flowed into the sector reached US$281.8 million, a significant increase compared to the total FDI of US$165.3 million that the sector absorbed in 2022.

Meanwhile, the total number of construction businesses has been decreasing slightly over the years from a total of 197,030 businesses in 2022 to 190,677 businesses in 2023. Considering the rapid growth of the sector, this decrease in construction businesses is attributed more to mergers and acquisitions rather than the businesses’ ceasing operations. Additionally, it is worth noting that in 2023, the total number of Construction Labor Certificates (SKK) and registered construction expertise certificates (SKA) reached 261,720 and 38,328, respectively.

Latest News

December 8, 2025

On Nov. 25, flash floods triggered by Cyclone Senyar struck Sumatra, severely damaging Aceh, North Sumatra, and West Sumatra. Two weeks later, more than 3 million people had been affected, with 1 million displaced, 836 dead, 518 still missing, and some 2,700 injured as of 16.00 Western Indonesia Time (WIB) on Dec. 4.

Yet, despite the rising death toll and massive displacement, by not declaring a national emergency, President Prabowo Subianto and his administration have hesitated to acknowledge the severity of the tragedy. By comparison, when Cyclone Senyar brought intense flooding to Thailand and Sri Lanka, both governments declared national emergencies within days.

On the ground in Aceh, local administrations have reached a breaking point. Three regents in Aceh publicly raised white flags, signaling their inability to handle the crisis as government facilities were swept away along with entire communities.

Aceh Governor Muzakir Manaf held back tears as he revealed that four villages in the region had been completely decimated. He described the flash floods as Aceh's "second tsunami", recalling the 2004 tragedy that claimed over 178,000 lives, an event he witnessed firsthand as a commander of the Free Aceh Movement.

Under Law No. 24/2007 on Disaster Management, a disaster may be elevated to national status when its scale exceeds local authorities' capacity to respond. These calls should have warranted greater consideration from the central government. Yet, when questioned by reporters, Prabowo said the situation on the ground was improving and did not warrant a state of emergency.

Reluctance aside, civil society groups and environmental analysts have criticized the government's reliance on an extractive economy for facilitating this tragedy. Environmental watchdogs Indonesian Forum for Environment (WALHI) and Greenpeace argue the flash floods were as much man-made as they were natural. They point to decades of mass deforestation, the unfiltered expansion of oil palm plantations, and excessive mining on Sumatra. This has left river basins in critical condition and reduced forest cover in the three affected regions to less than 25 percent.

Analysts have also noted that state losses caused by natural disasters now outweigh the dividends received from extractive activities. The Jakarta-based think tank Center of Economic and Law Studies (CELIOS) notes that a total of Rp 68.67 trillion (US$4.1 billion) was lost to floods and other natural disasters this year alone, compared to the Rp 16.6 trillion the state received in total mining revenue levy.

To address these claims, a national press conference was finally held on Dec. 3, though Prabowo was nowhere in sight. The public address was led by the Office of the Coordinating Human Development and Culture Minister Pratikno alongside State Secretary Prasetyo Hadi, Cabinet Secretary Teddy Indra Wijaya, Home Minister Tito Karnavian, and leaders from both the National Police and the Indonesian Military (TNI).

Cabinet Secretary Teddy acknowledged that environmental degradation had worsened the floods' impact, echoing activists' concerns. National Police Chief Gen. Listyo Sigit Prabowo said detectives had begun coordinating with the Forestry Ministry to investigate illegal logging, after cut logs were seen floating during the floods.

Pratikno provided a summary of the central government's relief efforts, which include the delivery of 500,000 tonnes of aid and cross-sectoral coordination between the TNI, National Police, National Disaster Mitigation Agency (BNPB), and other bodies. The minister also apologized for the government's missteps in managing the tragedy and promised that rehabilitation and reconstruction efforts would be rolled out in the next 100 days.

Prabowo visited flood victims on Dec. 1, but his reluctance to declare a national disaster has fueled speculation about his motives. Rumors circulated that the President, not Pratikno, had been scheduled to address the press at the palace earlier in the day. The hesitation has drawn attention to political divides: Aceh and West Sumatra were among the few provinces where Prabowo lost in the 2024 presidential election, while he secured an outright majority in North Sumatra.

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