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

April 1, 2026

President Prabowo Subianto has utilized the Lebaran (Idul Fitri) holiday to maintain his ties with key political figures, including Megawati Soekarnoputri, chairwoman of the Indonesian Democratic Party of Struggle (PDI-P). As the only major party that has not formally declared support for his administration, Megawati’s potential backing represents the “One Piece”: the final element needed for Prabowo to fully consolidate his leadership, an outcome he has long pursued.

In the popular Japanese anime series, the titular "One Piece" is the ultimate treasure sought by the pirate captain Monkey D. Luffy to become king. In Indonesia’s political context, the "One Piece" is the final part of Prabowo’s coalition: securing the PDI-P’s support to ensure total legislative and executive harmony. To date, the majority of parties in the House of Representatives is behind Prabowo, with the PDI-P as the sole exception.

This effort became increasingly evident when Prabowo and Megawati met just days before Lebaran. Notably, Megawati has taken a different approach than other former presidents: while others frequently attend invitations to the State Palace, Megawati often declines, largely due to long-standing personal friction with fellow ex-presidents Susilo Bambang Yudhoyono and Joko “Jokowi” Widodo. As such, meetings between Prabowo and Megawati are typically conducted behind closed doors with limited participants, accommodating a more exclusive and arguably more substantive engagement.

According to Cabinet Secretary Teddy Indra Wijaya, the pair addressed current geopolitical dynamics following Megawati’s visits to the United Arab Emirates and Saudi Arabia. However, that their preholiday meeting lasted two hours suggests discussions likely extended into internal political stability, particularly amid the growing tension involving PDI-P politicians.

Notably, lawmakers My Esti Wijayati, Adian Napitulu, Bonnie Triyana and Deni Cagur have criticized the 2026 State Budget Law, arguing that it improperly allows education funds to be reallocated to the National Nutrition Agency (BGN) for the purpose of implementing Prabowo’s flagship initiative, the free nutritious meal program.

Interestingly, their criticism might indirectly challenge the PDI-P’s senior figure Said Abdullah, who chairs the House Budget Committee and oversaw the legislature’s approval of the draft state budget in mid-2025. Furthermore, the free meals program is seen as consuming a substantial portion of the 2026 budget, increasing pressure on fiscal capacity amid global economic uncertainty and rising oil prices. The reallocation of education funds has also led to dissatisfaction among local leaders, as it has constrained regional transfers from the central government.

In response to claims by the BGN that all parties, including the PDI-P, had benefited financially from potential budget misuse linked to the free meals program, the PDI-P issued a circular instructing its members to avoid such an outcome.

Meanwhile, Prabowo remains firm in emphasizing that the program must continue to support lower-income households.

The legal validity of the program’s funding allocation is being challenged at the Constitutional Court, where contract teacher Reza Sudrajat has argued that education spending had fallen below the minimum 20 percent of the state budget as constitutionally mandated.

The recent meeting between Prabowo and Megawati is widely seen as an attempt to bring the PDI-P into his big-tent coalition. If the PDI-P does join up, formal opposition would effectively vanish and allow for smoother implementation of government programs at both the national and regional levels. To accommodate this, however, Prabowo’s Gerindra Party will likely need to adjust its share of ministerial positions to provide the PDI-P a proportional seat at the table.

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