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
East Java Governor Khofifah Indar Parawansa conveyed East Java's readiness to be a friendly host for investment, which she noted has been proven by the provision of ease of investment facilities, while accompanying President Prabowo Subianto to inaugurate PT Freeport Indonesia (PTFI)'s precious metal refinery (PMR) in the Java Integrated Industrial and Port Estate (JIIPE), Gresik Regency, East Java on Mar. 17, 2025.
The inauguration was marked by the laying of a gold miniature and the signing of an inscription by Prabowo. He was also accompanied by Energy and Mineral Resources (ESDM) Minister Bahlil Lahadalia and State-Owned Enterprises Minister Erick Tohir.
"We are trying to improve partnerships between investment-supporting business communities, conduct integrated investment promotions, prepare Investment Project Ready to Offer (IPRO) in the industrial, infrastructure, tourism, and property fields, and use the 'JOSS Gandos' [or] Jatim Online Single Submission application to improve the quality of permitting services," she explained.
Realized investments to East Java increased by 1.5 percent year-on-year (yoy) for the January to December 2024 period. Domestic investments to East Java surged by 23.3 percent, but foreign investments dropped by 21.8 percent. East Java contributed to 7.9 percent to Indonesia's total investment realization for the fourth quarter (Q4) of 2024. That achievement placed East Java only behind West Java and Jakarta Special Capital Region (DKI) for investment realization.
"Alhamdulillah, this achievement places East Java in third place nationally," said Khofifah.
Meanwhile, Prabowo specifically requested that East Java to become a friendly host for investors, and be able to maintain a good investment climate.
"Thank you, Madam Governor, East Java is indeed extraordinary, every month there are new factories, new buildings." He concluded.
