Indonesia is one of Asia’s biggest construction markets – and the fastest growing. Multinational engineering and consultancy firm AECOM predicts Indonesia will show the fastest construction market growth by 2020 of any Asian country.

 

The government is pouring billions into large scale infrastructure projects, which is serving as a major catalyst for medium term construction growth. 30 infrastructure projects, including toll roads, ports, public transport networks and new railway links, worth over $68 billion have been given priority and are to be developed by 2019.

 

Road building activity is set to fuel impressive growth in this segment of Indonesia’s building industry. BMI research predicts that the Indonesian road sector will grow at compound annual growth rate of 12.8% between 2015-2024.

 

Heavy equipment suppliers have also seen some impressive growth figures too. The segment has recorded 30% growth in the construction industry – a welcome reprieve given the negative rates observed in all other verticals this industry works across.

 

A much anticipated tax amnesty, announced in June 2016, means over $304 billion worth of re-patriated funding inflows are heading back into Indonesia from overseas. The construction industry is predicted to benefit from this huge influx of funds.

 

At the time of the tax amnesty’s implementation, President Joko Widodo stated: “The most important thing is that the capital inflows can be used to construct our outstanding infrastructure projects.” President Widodo also urged the relevant Indonesia authorities to prepare instruments to handle this massive cash injection.

 

Infrastructure and construction forms a major part of Indonesia’s economic growth strategy. The nation is hoping to become a $2 trillion dollar economy by 2020, but needs to average 7% growth annually to hit this target.

Current GDP stands at $895 billion.

 

Bank Indonesia initiated a series of interest rate cuts throughout the last year, with the rate now standing at 6.75%, which has also positively affected growth in the construction industry. Financing is subsequently more affordable. 

 

Companies have also been increasingly recurring to bonds as an additional method of levering finance expansion. Data from the Indonesian Financial Services Authority (OJK) suggests the level of firms using this finance tactic has increased 45% year on year.

 

The construction industry of Indonesia is one of the world’s most vibrant and enticing. To learn more about the state of the industry, and the opportunities it presents for international companies, why not download ITE Build & Interiors’ free guide today? 

 

Indonesia’s Construction Industry: Building the Archipelago breaks down the building and interiors sector to give you the insight on how you can succeed in Asia’s fastest growing construction market. Click here to download the guide today.