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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Indonesia’s official response to the attack on Iran by Israel and the United States is unusual to say the least. The Foreign Ministry in a statement said Indonesia deeply regretted the breakdown of the negotiations between the US and Iran, offered to mediate to break the impasse between the two countries, and added that President Prabowo Subianto Prabowo Subianto Djojohadikusumo, 72, is a retired Army lieutenant general, a businessman and the incumbent Defense Minister (2019-present). Due to his proximity to power throughout his military career, he entered politics in 2004 to pursue his dream of becoming the nation’s president. had “stated his readiness to launch diplomatic visits straight to the heart of the conflict, if necessary”.
While Prabowo may be genuine in his intentions for peace, the more pertinent question is would the US and Iran take him seriously? Would Israel?
Iranian Ambassador to Indonesia Mohammad Boroujerdi poured cold water on the proposal, saying Iran would not launch any new negotiations “with the enemy”. Out of diplomatic courtesy, the ambassador said his government appreciated Prabowo’s gesture.
There has not been any official response from the US. Israel, which is a party to the conflict, has not responded, but that is probably because the Indonesian statement makes no reference to Israel, with which Jakarta has no diplomatic relations.
The statement also fell short of condemning the attack as an act of aggression in violation of international law, just as Indonesia also refrained from condemning the US bombing of Venezuela and the abduction of its president, Nicolas Maduro, in January.
This time, the statement expressed deep regret at the breakdown of the negotiations and the ensuing escalation of the conflict. There was not even any recognition of the attacks.
At any rate, President Prabowo may lack the qualifications or credentials to be a peacemaker.
His decision to sign up to the Board of Peace set up in January by US President Donald Trump has undermined his claim to be an honest broker, especially given widespread criticism of the board, which was set up to enforce Trump’s peace initiative in Gaza.
At home, critics are still not convinced that joining the board will afford Indonesia the voice to convince Israel and the US to work toward the creation of an independent Palestinian state under the two-state solution. Nevertheless, they were willing to give him the benefit of the doubt on his claim that this was the only option available to stop Israel’s killing of Palestinians in Gaza.
Prabowo may appear to have the attention of Trump through their encounters in the lead up to the formation of the Board of Peace, but he has no direct link with Israel, and has not established a rapport with the Iranian leadership, or what is left of it following the death of Supreme Leader Ali Khamenei and several other top leaders by Israel-US bombing.
Prabowo has visited just about every country that matters in the Middle East, with the exception of Iran. If his Middle East campaign was played out as part of his strategy to get Indonesia involved in the peace process in the region, Iran should have been on his itinerary.
Prabowo, a former Army general, also lacks the personal credentials as peacemaker, at home or abroad. Former vice president Jusuf Kalla built his peace-making track record in resolving conflicts in Indonesia’s Maluku and Aceh regions, and he had been sent on missions to Myanmar and several other hot spots in the region to help find peace.
Critics say tackling the dispute between US and Iran, and presumably Israel, is almost an impossibility or certainly beyond Indonesia’s or Prabowo’s capability.
If he wants to build his peace-making credentials, he may want to start small and on something closer to home, for example the border dispute between Cambodia and Thailand, India and Pakistan over Kashmir, or now between Pakistan and Afghanistan.
The suggestion for Prabowo to mediate the peace between the US-Israel and Iran nevertheless prompted a debate at home.
Former deputy foreign minister Dino Pati Djalal questioned Indonesia’s effectiveness now that it has become clear that the intention of the attacks is to bring about regime change in Tehran and no longer about dismantling Iran’s nuclear and weapons’ capability.
Describing the proposal as unrealistic, Dino said Trump is not likely to allow anyone to intervene in his campaign against Iran. He also said Indonesia may not have gained the trust of Iran given the minimum contacts between Prabowo and Iranian leaders in Tehran, while the idea of Prabowo meeting with Israel’s Prime Minister Benjamin Netanyahu, should that happen, could be a “political suicide” for him at home.
Some politicians, however, support Prabowo’s peace initiative.
Sukamta, the deputy chair of the House of Representatives Commission I on foreign affairs, said the proposal was consistent with Indonesia’s free and active foreign policy principle and the constitutional mandate for Indonesia to promote global peace.
But unlike the Prabowo administration, Sukamto of the Prosperous Justice Party (PKS) condemned the US-Israel attack on Iran as military aggression that threatens regional stability.
