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Green building in Indonesia – the carrot or the stick?

Green building is spreading through the global construction sector as attitudes change and technology advances – 51% of building professionals surveyed by McGraw Hill Construction in 2013 said that 60% of their work will be green by this year. This figure is even higher in Asia, where 64% of those surveyed said they were carrying out green projects as early as 2012. Among the countries of Asia, Singapore is leading the way in this regard with double the share of green projects than the Asian average, but what about Indonesia, the region’s biggest economy and a country with a booming construction sector?

A booming industry

Untouched by the 2009 global slowdown, Indonesia’s economy has grown massively over the 15 or so years since the Asian financial crisis of the late 90s. Annual GDP growth has ranged from 5% to 6% since 2010, and the World Bank forecasts this growth to stay around the 5.5% mark until 2016.

The role of Indonesia’s building sector in this growth has been huge. At $183bn in 2013, construction spending accounts for a full quarter of the country’s GDP, and the sector’s performance keeps outstripping general economic indicators – from $25bn in 2011, it grew 60% to be worth $40bn in 2013. With big infrastructure spending promised by new president Joko Widodo and an estimated backlog of 15 million houses, it would take a serious pessimist to forecast anything but continued growth for the sector.

What role has green building played in this growth, and how has the movement developed in Indonesia? The main body responsible for promoting greener construction is the Green Building Council of Indonesia, founded in 2009 and a member of the 90-country World Green Building Council. Its activities involve certification of green buildings, speaking and appearing at industry events, and trying to convince the Indonesian building community that it makes economic as well as environmental sense to make their buildings energy efficient.

Current status of green building – the carrot vs the stick

The general view is that while much has been done to encourage green building in Indonesia, the incentives are not attractive enough and the legislation is not strict enough to really get things moving yet.

There has been some progress, though. One year after it was set up, the GBCI succeeded in introducing a Greenship Rating tool, which ranks buildings in six categories (land use, energy efficiency, water conservation, source materials, air quality and environmental management) in a similar way to ratings systems in Europe. However, the Greenship Rating is voluntary and take-up is low – only ten buildings in the whole of Indonesia are certified green, with a further 70 being examined by the GBCI hoping to get the status. 40 of these are in the capital Jakarta. The GBCI has also launched the Greenship Associate and Greenship Professional training programmes, providing education, competency training, and assistance on green buildings to industrial and professional associations. Its GBCI Membership Catalogue also lists green products from over 100 member companies.

To date, the only serious stick to go with the carrot of energy savings is legislation passed by the Jakarta authorities in 2012 and implemented the following year, which sets out a range of requirements to ensure greater energy efficiency in the capital’s buildings.  Affecting office buildings over 50,000 sqm, hotels over 20,000 sqm and schools over 10,000 sqm, the law’s demands include maximum energy consumption of 45 watts per sqm, a minimum indoor temperature to save on air conditioning usage, and a requirement to treat and re-use wastewater. The new regulations apply to existing buildings as well as new ones, a clause that has not gone down well with building owners as they look for the money to make the necessary improvements.

Water conservation – keeping Jakarta afloat

The focus of these new Jakarta regulations on water conservation is a pressing one for Indonesia’s capital. Most of Jakarta’s residents get their water from shallow wells, and as a growing population takes more water from under the ground, the resulting subsidence is causing Jakarta to sink – the metropolitan area is four metres lower than it was three decades ago. Combined with rising seas, this puts Jakarta at a real risk of catastrophic floods. While the $17bn National Capital Integrated Coastal Development wall will keep the sea out, city officials are trying to clamp down on unauthorised well use to fight against the other half of the flood threat and stop Jakarta from descending any further. If green building laws are tightened in future, water conservation and re-use is likely to form the backbone of any future legislation.

Major green projects

As well as legislation and tough new requirements, another way officials can encourage green building is to lead by example. This is what Indonesia’s Ministry of Public Works did when designing its new offices – an 18-floor building that secured the GBCI’s top Platinum energy efficiency rating when it opened in 2012. With two balcony gardens, rainwater storage facilities and technology that minimises fossil fuel consumption, the building uses 42% less energy than a normal office. “Contractors usually tender cheaper bids for conventional buildings, but our department has proved that green buildings can be built within government budgets,” said Yennel Suzia, head of the ministry’s Project Management Unit.

Another green office development begun in Indonesia is the Jakarta Box tower, a 32-storey office building combining modern performance with traditional Indonesian Betawi design. Scheduled for completion at the end of 2015, the building earned praise at its groundbreaking ceremony from Jakarta’s deputy governor Basuki Tjahaja Purnama, who described it as ‘a good example for those who want to build high-rise buildings in the future’. The deputy governor also took the opportunity to promise that the city would only issue permits to new high-rise buildings if they meet green building criteria.

The pride of Indonesian green building, though, is the Pertamina Energy Tower. This 99-storey megaproject will be the first net-zero energy skyscraper in the entire world when it opens in 2020, and its construction – as well as the global press coverage and praise it has received for its eco-credentials – has put Indonesia firmly on the global green building map. The tower goes beyond the call of duty in ensuring its energy neutrality – its tip design allows it to suck wind through a series of turbines to contribute 25% of the power it uses, while a geothermal borehole and solar roof panels will help supply the rest. As well as providing desk space for 20,000 workers, by the time it is finished in 2020 the complex will also house an arts auditorium, an exhibition pavilion and a mosque.


Getting the state energy company to throw its weight behind environmentally friendly construction is a big win, but the main battle to be won is with the small developers, contractors and project owners that form the spine of Indonesia’s building sector. The story here is a familiar one – the GBCI constantly struggles to impress on developers that although green building costs more initially, the energy savings and improved efficiency helps the early outlay pay for itself quickly. “Most of our clients tend to think green buildings are expensive,” said Hadjar Seti Adji, Branch Manager of PP Construction, in a short film produced by the GBCI. “But they always think about the initial cost, not the whole cost. It is always our problem to give an understanding of this to the client, but for the private client this is easy, easier than a government client. Why? Because they always think about the business. They compare the initial cost to the operational cost, looking for the whole cost. And for the whole cost, a green building is less expensive than a normal building.”

“We have the calculations,” said Waspada Kurniadi, Head of Energetic Materials at Dahana Corp. “We show (the client) the long-term benefit.”

A common wish is for tax breaks for green building similar to those found in other countries – not least from GBCI itself. “(We would want) financial support for the green building movement – incentives or tax reductions,” said its chairwoman Naning Adiwoso. “Economic value gains people’s interest in green building and gives more value to people applying green building principles.”

The future?

Indonesia’s progress in the seven years since the GBCI was established has been impressive – it has a ratings tool, an active body pushing green building principles, and some attempt at legislative efforts to green up its construction, at least in Jakarta. But looking at the rest of Asia, it lags behind. Singapore has given green certification to 2,100 buildings since 2005, a full 25% of its built-up area, and Bangladesh has recently seen a 420% growth in eco-homes listed on one of its leading property websites. In Pakistan, 17% of the 100,000 house listings on the Lamudi property portal are eco-friendly to some degree.

As the biggest economy and the most-populated country in South-East Asia, Indonesia definitely has the potential to push on with its certification and develop a thriving green building sector. But it is likely to need outside help, with both technologies and advice. The GBCI benefits greatly from its membership of the World Green Building Council, with a regular programme of conferences and events helping Indonesia learn from the expertise of others, and Australian companies have been heavily involved in designing green cities in Jakarta. With this in mind, there is real opportunity for international sellers of advanced building materials and green technology to capitalise on Indonesia’s green progress. 

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