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 Deputy Governor Emil Elestianto Dardak received a courtesy call from Finnish Ambassador to Indonesia H.E. Jukka-Pekka Kaihilahti at the Shangri-La Hotel in Surabaya City, East Java. The visit on Apr. 29, 2025, is a strategic moment to strengthen Finnish-Indonesian bilateral cooperation, especially in the fields of investment, trade, forestry, and sustainable industrial development.
In the meeting, Emil offered the Java Integrated Industrial and Ports Estate (JIIPE) Special Economic Zone (SEZ) in Gresik Regency as a leading investment destination for Finland. The SEZ is a modern integrated industrial area equipped with a seaport and designed to support an environmentally friendly industrial ecosystem.
"The JIIPE SEZ is a symbol of East Java's commitment to creating a globally competitive investment environment. We invite Finland to participate in its development," said Emil.
East Java recorded deficits for its balance of trade (BoT) with Finland from 2020 to 2023 based on data from the Indonesian ministries of Industry and Trade. But the province succeeded in recording US$11.91 million BoT surplus with the Nordic country, as exports from East Java to Finland reached US$31.7 million while imports reached US$19.79 million.
East Java's main export commodities to Finland include copper, paper and cardboard, electrical machinery and equipment, vehicles and their components, as well as rubber and wood products. Meanwhile, imported goods from Finland include mechanical machinery, pulp, plastic, adhesives, enzymes, and pharmaceutical products.
Finland is recorded as the 56th largest investor into East Java, with a total investment value of US$250,000, spread across three companies in the chemical, pharmaceutical, as well as the trade and repair sectors. Emil conveyed the readiness of the East Java Provincial Government to facilitate further exploration on cooperation between the province and Finland, including in a follow-up visit to the Finnish Embassy in Jakarta.
In response, Kaihilahti welcomed East Java's invitation to cooperate and expressed Finland's deep interest in the forestry and forest product manufacturing sectors, including in their technology, marketing, and sustainability. He also mentioned the energy, agriculture, and mineral processing sectors as having promising potential for bilateral collaboration.
"We see great opportunities in East Java for collaboration in the fields of sustainable forestry and smart cities, including education and digitalization," said Kaihilahti.
He added that on a delegation of Finnish companies planned to visit the JIIPE SEZ, which has collaborated with several industrial partners such as PT Freeport Indonesia (PTFI).
"We want to explore the collaborations that has been executed through large Finnish companies such as Konecranes, Wärtsilä, and Metso, as well as explore new potential [cooperations]," he explained.
Examples of cooperation between Finnish and Indonesian parties is the use of Finnish technology in the Freeport smelter project and various industrial facilities in the JIIPE SEZ.
