Summary

The Indonesian construction industry had been growing at a relatively fast pace prior to the Coronavirus (Covid-19) crisis, with the industry registering growth of 5.8% in real terms in 2019, which was marginally down from growth of 6.1% in the previous year. Growth had been driven by investments on the national strategic projects, mainly in the transport infrastructure sector. In 2020, however, Large-Scale Social Restrictions (PSBB) imposed by the government to contain the spread of Covid-19 and the global travel restrictions have affected the availability of manpower and raw materials, thereby weighing on the Indonesian construction industry’s growth in the first half of 2020. The construction industry declined by 5.4% year on year (YoY) in the second quarter, following growth of 2.9% in the previous quarter. GlobalData expects the industry to grow marginally by 0.5% in real terms this year. The industry will be affected by the delays in project implementation and the re-allocation of part of the government’s budget towards its fight against Covid-19. The government re-allocated 20.4% of its 2020 budget - IDR24.5 trillion (US$1.7 billion) - to Covid-19 relief measures.

On a positive note, the industry’s growth is expected to be supported by the government’s focus on infrastructure development to revive the country’s economy. In late September 2020, the Indonesian Parliament approved the IDR2.8 quadrillion (US$185.3 billion) draft budget for 2021. Of the total, it allocated IDR413.8 trillion (US$29 billion) towards infrastructure development, which will mainly focus on reviving the economy, providing basic services, and improving connectivity. However, a downside risk could arise from the general financing and land acquisition issues in implementing toll road projects, corruption and the surging Covid-19 infections in the country, which could translate into a weaker economy and lower tax revenue, thereby weighing on the government expenditure.

The government had a plan to begin infrastructure work related to the IDR468.4 trillion (US$33 billion) capital city relocation project in 2021, but in September 2020, the National Development Planning Agency (Bappenas) announced that the project has been formally put on hold due to the economic impact of the pandemic. Although construction has been temporarily suspended, the government will continue to move ahead with its planning, with infrastructure work expected to commence in 2022 or 2023. GlobalData expects the Indonesian construction industry to stabilize and record an annual average growth of 5.7% between 2021-2024, supported by infrastructure investments under the National Medium-Term Development Plan (2020-2024 RPJMN). The plan is to invest IDR6 quadrillion (US$412 billion) on the development of transport, industrial, energy and housing infrastructure projects over the next four years.

This report provides detailed market analysis, information, and insights into the Indonesian construction industry, including -
- The Indonesian construction industry's growth prospects by market, project type and construction activity
- Critical insight into the impact of industry trends and issues, as well as an analysis of key risks and opportunities in the Indonesian construction industry
- Analysis of the mega-project pipeline, focusing on development stages and participants, in addition to listings of major projects in the pipeline.

Scope

This report provides a comprehensive analysis of the construction industry in Indonesia. It provides -
- Historical (2015-2019) and forecast (2020-2024) valuations of the construction industry in Indonesia, featuring details of key growth drivers.
- Segmentation by sector (commercial, industrial, infrastructure, energy and utilities, institutional and residential) and by sub-sector
- Analysis of the mega-project pipeline, including breakdowns by development stage across all sectors, and projected spending on projects in the existing pipeline.
- Listings of major projects, in addition to details of leading contractors and consultants

Reasons to Buy

- Identify and evaluate market opportunities using GlobalData's standardized valuation and forecasting methodologies.
- Assess market growth potential at a micro-level with over 600 time-series data forecasts.
- Understand the latest industry and market trends.
- Formulate and validate strategy using GlobalData's critical and actionable insight.
- Assess business risks, including cost, regulatory and competitive pressures.
- Evaluate competitive risk and success factors.