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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The first batch of Indonesians evacuated from war-besieged Iran landed back home on March 11, after an overland journey that took them through Azerbaijan and Turkey before they were flown to Jakarta. Following this group of 22 people will be a few more batches in the coming days and weeks as citizens flee the ongoing United States-Israelis attacks.
This successful first evacuation attests to the government’s current plan to transport its citizens to safety from conflicts around the world.
More than 300 Indonesians, mostly university students, were living in Iran when the latest round of US-Israeli attacks began on Feb. 28. With the war not only escalating but also widening to involve more Gulf countries, the government may face its biggest test regarding its evacuation contingency plan, which is yet to be activated.
The government says more than 500,000 Indonesians live and work in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates; countries that are being dragged into the war because they host US military bases.
The real number could be much higher, since many Indonesians don’t register with the embassies or consulates in these countries. The bulk of Indonesians who reside in the Middle East are domestic helpers or construction workers, but there are also some white-collar workers, including oil professionals.
If the government is prompted to activate its contingency plan, the scale will likely be much higher and more complicated than it has ever experienced before, given that the geography of these countries offers limited escape routes.
The Foreign Ministry, which leads the interagency team for managing evacuations, says it has formed a crisis response team to prepare for this eventuality so the government can move quickly if security conditions deteriorate further. This crisis team involves the military, including the Air Force, which in the past has deployed transport planes to evacuate citizens from troubled spots like Afghanistan, Egypt, Iraq and Ukraine.
Meanwhile, embassies in the region have been ordered to closely monitor the situation and alert the government if and when the plan needs to be activated.
Santo Darmosumarto, the ministry's director general of Asia, Pacific and Africa, said several Gulf governments had asked Indonesia not to activate its evacuation plan. While they did not provide any guarantees, they asked that expatriate Indonesians stay home to stay safe.
In the end, however, this is ultimately Indonesia’s call and not the host nations'. On the other hand, the US ordered on March 8 that nonemergency government employees and their dependents leave Saudi Arabia, and many of its travel advisories may give a clue about the scale of the danger.
The ministry says it has not received any report of Indonesian fatalities from the current war in the Middle East, though three Indonesian sailors are missing after a tugboat explosion the Strait of Hormuz. Another seaman who survived the explosion in the world’s busiest shipping corridor, which has now been crippled by war, is being treated at a hospital in Oman.
The Foreign Ministry and overseas missions in the Gulf region have also been busy arranging the repatriation of thousands of citizens stranded due to canceled or delayed flights and airport and airspace closures as the conflict escalates.
When the war began on Feb. 28, more than 50,000 Indonesians were performing umrah (minor pilgrimage) to Mecca, to which the country contributes over 1.2 million pilgrims each year. The government has been working with tour operators and airlines since to ensure their safe return, with embassies providing them temporary accommodation.
Following the issuance of a government advisory to postpone nonessential travel to the region, tens of thousands of Indonesians canceled their departure for umrah. The war is now looming large over the scheduled haj in May, in which more than 200,000 Indonesians are registered to take part.
The best-case scenario as far as Indonesian civilians are concerned is, of course, for the war to end soon. But the government has made preparations for the worst-case scenario: a full-scale war that could put more than half a million Indonesian lives in danger.
The bigger question is whether the current evacuation contingency plan will suffice.
