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
Banking state-owned enterprise (SOE) PT Bank Rakyat Indonesia (Persero) Tbk or BRI is involved in the syndicated financing of the Trans Papua Road project, Jayapura-Wamena Section, Mamberamo-Elelim Segment in the Papua Mountains Province.
BRI Wholesale & Institution Business Director Agus Noorsanto said that BRI's involvement in the project is real evidence of the company's contribution in supporting the development of national strategic infrastructure.
"The high interest of financial institutions in financing this project is reflected in the oversubscription rate of 1.27 times, which shows the great trust of financial institutions in the prospects of the Trans Papua [Road] government-enterprise partnership project," said Agus in his statement in Jakarta on Jan. 8, 2025.
The Trans Papua Road project has a total investment value of Rp3.3 trillion with a concession period of 15 years that includes two years of construction and 13 years of service. The 50.14-kilometer road is intended to be the main route for logistics transportation connecting Jayapura City, Papua Province and Wamena Regency, Highland Papua Province.
The project will be implemented by PT Hutama Mambelim Trans Papua (HMTP), which was formed through a consortium between construction state-owned enterprise (SOE) PT Hutama Karya (Persero) and its subsidiary PT Hutama Karya Infrastruktur (HKI). The project uses the availability payment scheme, supported by a payment guarantee from PT Penjaminan Infrastruktur Indonesia, where the government provides payments periodically based on the agreed quality of service.
The syndicated financing involves four other financial institutions, namely PT Sarana Multi Infrastruktur (Persero) or SMI, PT Bank Negara Indonesia (Persero) Tbk or BNI, PT Bank Mandiri (Persero) Tbk subsidiary PT Bank Syariah Indonesia Tbk or BSI, and PT Bank Pembangunan Daerah Papua (Bank Papua). The total syndicated value reached Rp2.6 trillion, consisting of conventional scheme financing worth Rp2.36 trillion and sharia scheme financing scheme worth Rp300 billion.
The HMTP consortium has officially signed a syndicated financing agreement for the Trans Papua Road project. BRI and SMI act as coordinating banks for the project, while BNI acts as the Joint Mandate Lead Arrangers and Bookrunners (JMLABs). As one of the coordinating banks, Agus said that BRI is committed to continuing to encourage synergy between the partnership's resulting consortium, financial institutions, PT Penjaminan Infrastruktur Indonesia (PII), and the government.
"The collaboration is expected to be a strong foundation to support the success of other strategic projects through the government-enterprise partnership scheme in the future," he said.
