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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President Prabowo Subianto wants Indonesians to enjoy free education from kindergarten through university. Few would dispute the objective of making education more accessible. The harder question is how the government will pay for it. The state has yet to fully fund a Constitutional Court order to extend free compulsory basic education to private schools, even as Prabowo adds free university tuition to a budget already carrying increasingly expensive signature programs.
Prabowo reaffirmed his commitment at a limited cabinet meeting at the State Palace on Sept. 23, calling for free education at state institutions from kindergarten through university. The proposal followed his statement five days earlier that education at state schools and universities should be free, with funding potentially coming from money recovered from corruption.
At the school level, however, much of that promise already exists. Basic and Secondary Education Minister Abdul Mu'ti has said that state schools from kindergarten through senior high school are effectively free through the School Operational Assistance (BOS) program, complemented by the Smart Indonesia Program (PIP) for students from poorer families.
The more pressing unfinished obligation lies elsewhere.
In May 2025, the Constitutional Court ruled that limiting free compulsory basic education to public schools created unequal access because limited capacity at public schools forces some children to attend private schools. It ordered the government and regional administrations to guarantee compulsory basic education without charging fees at both public and private, or community-run, schools.
More than a year later, that ruling has yet to be fully implemented. The estimated cost is around Rp 181 trillion (US$10.3 billion), while roughly Rp 71 trillion has been approved for 2026, requiring implementation to be phased according to the government's fiscal capacity.
Before completing that obligation, however, Prabowo is ordering another, potentially larger commitment: making tuition free at state universities.
The Higher Education, Science and Technology Ministry told House of Representatives Commission X in September that abolishing tuition for 2.83 million undergraduate and diploma students at state universities would require Rp 93.74 trillion a year, excluding postgraduate students. That works out to roughly Rp 33.1 million per student annually.
The figure is so large partly because state universities have become increasingly dependent on tuition revenue. For the country's 20 autonomous state universities, or PTN-BH, government support reportedly fell from around 19-20 percent of operating costs in 2015 to just 5-6 percent in 2024, with tuition increasingly filling the gap.
Free tuition therefore raises a question beyond simply eliminating what students pay: Who replaces the revenue on which universities now depend?
The Rp 93.74 trillion estimate could also be only the beginning. Some lawmakers have argued that eliminating tuition alone would not remove financial barriers because students still need money for housing and other living expenses. Lecturers have pointed out that tuition helps finance teaching staff, laboratories, libraries and research. Private universities could also face competitive pressure if state universities became free while they continued charging tuition.
These are legitimate concerns. But they also illustrate how quickly an apparently straightforward promise of free tuition can become a much larger fiscal commitment. And fiscal space is precisely what Indonesia lacks.
The 2026 state budget already allocates Rp 769 trillion to education. But that figure includes spending on Prabowo's free nutritious meal program, which has an allocation of Rp 335 trillion this year.
The Constitutional Court ruled in July that free meals program spending that is not a core component of education must eventually be separated from the constitutionally mandated education budget, no later than for the 2028 budget. According to calculations cited in the draft, education spending without the program would amount to only 14.2 percent of the budget, leaving a gap of nearly six percentage points, equivalent to around Rp 240 trillion, from the constitutional 20 percent allocation.
Meanwhile, the state budget deficit widened from Rp 164.4 trillion in April to Rp 240.1 trillion by August. The latter amounted to 0.93 percent of gross domestic product, with state spending already exceeding revenue by around Rp 240 trillion during the first eight months of the year.
This does not mean Indonesia should abandon the goal of affordable higher education. The question is whether free universal tuition is the most efficient use of scarce public money when the state has not yet fully financed its existing constitutional obligation at the basic education level.
The university proposal, as currently discussed, would subsidize all 2.83 million students regardless of their families' ability to pay. A more targeted scheme could concentrate assistance on students who cannot afford tuition, costing a fraction of Rp 93.74 trillion while preserving fiscal room to implement the Constitutional Court's ruling on basic education.
Free education from kindergarten to university is an appealing ambition. But every promise ultimately has to fit within the same state budget. With the free meals program, the Red and White cooperatives and other priorities already making large claims on public resources, the government needs to establish not only what education it wants to make free, but also which obligations should come first and who genuinely needs state support.
