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Indonesia construction growth rate climbs in Q2

The value of construction work carried out in Indonesia surged during the second quarter of 2015, according to a new report from the country's central bureau of statistics.

In its latest Construction Indicator, the bureau revealed that the growth rate for construction value climbed by 4.11 points on the previous quarter. Over the 12 months to the end of June 2015, the construction value index rose from 186.16 to 197.62.

The report contained several other statistics that show Indonesia's construction industry is in strong shape. The growth rate of permanent workers - a useful indicator of the number and size of construction projects taking place across the country - rose by 1.18 quarter on quarter, while man-days (a unit relating to the amount of work that can be carried out by one person throughout a day) saw an increase of 3.64 points.

Furthermore, Indonesia's overall business climate appears to have improved throughout the study period. The business condition index climbed from 48.14 at the start of the year to 53.23 by the end of the second quarter, indicating that the majority of respondents now believe the country's business conditions are getting better. 

While conditions across Indonesia as a whole are promising, Jakarta – recently forecasted by AECOM to enjoy the fastest construction market growth of any Asian country over the medium term – looks even more positive. The capital city district's business conditions index surged from 48 between January and March to 59.62 over the following three months.

Equally encouragingly, a significant majority of the 3,000 construction companies surveyed agreed there has been a drop in the number - or scale - of problems affecting their business. The index dipped to 26.28 from 27.84 in the previous quarter.

Why building material suppliers should consider Indonesia

As the statistics bureau's report demonstrates, Indonesia's construction market is in a positive position. Of course, this is of huge benefit to the domestic construction trade, but it also presents a major opportunity for overseas companies selling building materials.

Indonesia imports a wide array of products. In fact, the Observatory of Economic Complexity says Indonesian imports totalled $184 billion in 2013, making it the world's 27th largest importer. Imports increased at an annual rate of 7.6 per cent over the preceding five years.

Of these imports, many fall within the category of building materials. For instance, Indonesia imported $167 million of float glass in 2013, along with $62.1 million of glazed ceramics, $55.9 million of building stone and $48.6 million of cement articles.

With the outlook for the Indonesian construction sector appearing bright, building materials companies looking to expand their operations should strongly consider the country as a market for their products.

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