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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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.
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The recently passed Police Law revision is difficult to view in isolation. Coming just over a year after the controversial revision of the Indonesian Military (TNI) Law, it forms part of a broader pattern in which Indonesia's security institutions are steadily gaining greater authority, flexibility and access to civilian spheres.
Since the House of Representatives designated the revision of the 2002 Police Law as a legislative initiative on May 20, the deliberation process moved at an unusually rapid pace. Less than three weeks later, lawmakers endorsed it in a plenary session on June 9. With parliamentary approval secured, the revised law is expected to be promulgated and published in the State Gazette in early July.
The amendments revise 10 articles and introduce seven new provisions. One of the most contentious issues concerns the placement of active police officers in civilian institutions. Observers have argued that the law contradicts the spirit of Constitutional Court jurisprudence requiring police officers to resign from active service when occupying positions outside the police institution.
Under the newly enacted law, however, there is no explicit provision requiring active officers assigned to external institutions to resign or retire from the police force. Instead, the law permits such assignments as long as they are deemed related to police functions.
That omission matters. National Police Regulation No. 10/2025 already identifies 17 ministries and state institutions that can be occupied by active police personnel. Yet rather than specifying such institutions in the law itself, lawmakers chose to leave the details to future government regulations.
This approach creates significant ambiguity. Without explicit limitations contained within the body of the law itself, questions inevitably emerge regarding the boundaries of permissible assignments and the mechanisms available to prevent institutional overreach.
Public resistance has also begun to emerge through both street mobilization and legal channels. The wave of demonstrations that spread across several cities since June 12, initially driven by economic grievances, increasingly incorporated demands related to democratic governance and security-sector reform.
For instance, student demonstrations in Semarang and public protests in Surabaya included calls on June 15 to return the TNI and the National Police to their core institutional functions and opposition to the revised Police Law. At the same time, a group of advocates reportedly filed a formal judicial review petition before the Constitutional Court on June 12, challenging both the legislative process and substantive provisions of the law.
This strengthening of the National Police cannot be separated from its relationship with Indonesia's other major security institution, the TNI. Rivalries between the two organizations have long been part of Indonesia's political and security landscape, historically revolving around access to political influence, bureaucratic positions, state resources and proximity to executive power. The simultaneous expansion of opportunities for both institutions to occupy civilian roles therefore introduces a new dimension to this longstanding dynamic.
Interestingly, under President Prabowo Subianto - whose political identity is closely associated with the military - the strengthening of the National Police has continued to receive substantial political support. This is particularly evident in the final stages of the legislative process.
A last-minute proposal submitted by Deputy Law Minister Edward Omar Sharif Hiariej introduced provisions allowing four-star police generals to remain in office beyond the previous retirement limit of 61 years. Under the revised law, they may continue serving for as long as the president deems their services necessary. Such provisions not only extend institutional continuity but also potentially enhance executive influence over senior police leadership.
The final aspect worth highlighting concerns fiscal power. Institutional influence is often reflected not only in legal authority but also in access to public resources. During a working meeting with Commission III of the House on June 17, the National Police proposed an additional Rp 66.1 trillion (US$3.71 billion) allocation for the 2027 fiscal year, arguing that the indicative ceiling of approximately Rp 118 trillion remained insufficient to meet organizational needs.
When viewed alongside expanded authority, broader opportunities for civilian placement, extended leadership tenure, and stronger political backing the budget proposal reinforces the broader pattern of institutional consolidation currently unfolding within Indonesia's security sector.
Taken together, these developments suggest that the current administration's approach is not oriented toward strengthening a single security institution. Rather, it reflects a broader strategy of consolidating the state's security apparatus by expanding the influence, flexibility and institutional reach of both the TNI and the National Police.
The revised Police Law thus represents not merely a technical legal amendment but part of a wider reconfiguration of state power and security governance in post-reform Indonesia.
