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Indonesia Construction Market to Expand by 4.1% in 2025, Driven by Infrastructure Investments

Strategic Insights

— 2 min read

Indonesia's construction industry is expected to experience significant growth, supported by investments in transportation infrastructure projects, rising public and private sector investments in housing and power construction, and foreign direct investments. The industry is anticipated to register an average annual growth of 5.9% from 2026 to 2029, driven by investments in renewable energy, housing, and transport infrastructure sectors. Key players in the industry include contractors and consultants.

Key Takeaways:

  • The construction industry in Indonesia is expected to expand by 4.1% in real terms in 2025, driven by investments in transportation infrastructure projects.
  • The industry will be supported by rising public and private sector investments in housing and power construction projects, as well as foreign direct investments (FDI).
  • FDI in Indonesia reached IDR219.9 trillion ($13.7 billion) in the first quarter of 2025, marking a year-on-year (YoY) growth of 12.7%.
  • The mining sector accounted for approximately 23% of the total realized investment in Q1 2025, equivalent to approximately IDR104.3 trillion ($6.5 billion).
  • The industry analyst expects to register an average annual growth of 5.9% from 2026 to 2029, supported by rising investments in renewable energy, housing, and transport infrastructure sectors.
  • In April 2025, Indonesia's sovereign wealth fund, Danantara, and Qatar announced plans to invest IDR64.2 trillion ($4 billion) in Indonesia, prioritizing large-scale construction and infrastructure projects.
  • The funding aims to accelerate development in sectors such as transportation, energy, and urban development, supporting Indonesia's ambitious growth targets.
  • Indonesia launched Phase II (2025-2029) of construction for its new capital, Nusantara, in April 2025, with a state budget allocation of IDR44.9 trillion ($2.8 billion).

Statistics:

  • 4.1% growth in the construction industry in Indonesia in 2025.
  • IDR219.9 trillion ($13.7 billion) FDI in Indonesia in Q1 2025, marking a YoY growth of 12.7%.
  • 23% of the total realized investment in Q1 2025 went to the mining sector, equivalent to IDR104.3 trillion ($6.5 billion).
  • IDR64.2 trillion ($4 billion) investment in Indonesia by Danantara and Qatar in April 2025.
  • IDR44.9 trillion ($2.8 billion) state budget allocation for Phase II of the new capital Nusantara construction.

Sources:

  • "Indonesia Construction Market Size, Trends, and Forecasts by Sector - Commercial, Industrial, Infrastructure, Energy and Utilities, Institutional and Residential Market Analysis to 2029 (Q2 2025)" report by Research and Markets.
  • Ministry of Investment and Downstream Industry.
  • Danantara and Qatar announcement (April 2025).
  • Indonesia's sovereign wealth fund announcement (April 2025).
  • Indonesia's state budget allocation for Phase II of the new capital Nusantara construction (April 2025).

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