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.
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The Center of Economic and Law Studies (CELIOS) projected the impact of massive floods in Sumatra Island to cause the national gross domestic product (GDP) to decrease by Rp 68.67 trillion, or around 0.29 percent. CELIOS emphasized that the floods has a national impact due to their negative effect towards the flow of consumer goods and industrial needs, especially in North Sumatra as one of the nation's industrial hubs.
"When a disaster occurs in a region that disrupts transportation, the impact is not only felt in that province but also negatively impacts the national economy," said CELIOS Executive Director Bhima Yudhistira in an official statement on Dec. 1, 2025.
In terms of regional damage, the economy of Aceh Province is predicted to suffer losses of Rp 2.04 trillion, while North Sumatra and West Sumatra is expected to suffer Rp 2.07 trillion and Rp 2.01 trillion of losses, respectively.
These losses are calculated based on several assumptions. First, losses to houses, with each house reaching Rp 30 million. Second, losses to bridges, with each bridge rebuilding cost reaching Rp 1 billion. Third, losses to family income, based on the average daily income of each province multiplied by 20 workdays. Fourth, losses to rice fields, with losses reaching Rp 6,500 per kilogram assuming a yield of seven tons per hectare. Fifth, road repairs per 1,000 meters reaching Rp 100 million.
"When a natural disaster occurs, it disrupts distribution channels and causes trade to weaken. Furthermore, public consumption also weakens due to the lack of income during the disaster period," explained Bhima.
He assessed that this ecological disaster was triggered by deforestation due to land conversion into oil palm plantations and mining. The economic researcher believes that the contribution from mining and palm oil to Aceh, for example, is not comparable to the losses caused by the disaster.
"Aceh lost Rp 2.04 trillion, greater than its mining non-tax revenue of Rp 929 billion as of Aug. 31, 2025," Bhima explained.
Therefore, CELIOS is urging an immediate moratorium on both mining permits and the expansion of oil palm plantations. The government is also being urged to shift to a more sustainable economy.
"Without structural changes to the economy, ecological disasters will recur with far greater economic losses," Bhima concluded.
