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Housing

Indonesia Construction Market to Expand by 4.1% in 2025, Driven by Infrastructure Projects and FDI

Strategic Insights

— 1 min read

The Indonesian construction industry is poised for growth in 2025, with the market expected to expand by 4.1% in real terms, driven by investments in transportation infrastructure projects and rising foreign direct investments (FDI). According to the Ministry of Investment and Downstream Industry, FDI in the country reached IDR219.9 trillion ($13.7 billion) in the first quarter of 2025, a year-on-year (YoY) growth of 12.7%. The growth is also expected to be supported by investments in renewable energy, housing, and transport infrastructure sectors, with the analyst forecasting an average annual growth of 5.9% from 2026 to 2029.

Key Takeaways:

  • The Indonesian construction industry is expected to expand by 4.1% in real terms in 2025, driven by investments in transportation infrastructure projects and rising FDI.
  • FDI in Indonesia reached IDR219.9 trillion ($13.7 billion) in the first quarter of 2025, a year-on-year growth of 12.7%, with the mining sector accounting for approximately 23% of the total investment.
  • The analyst expects the industry to register an average annual growth of 5.9% from 2026 to 2029, supported by investments in renewable energy, housing, and transport infrastructure sectors.
  • Indonesia's sovereign wealth fund, Danantara, and Qatar announced plans to invest IDR64.2 trillion ($4 billion) in the country, prioritizing large-scale construction and infrastructure projects.
  • The Nusantara capital project has launched Phase II (2025-2029) of construction, with a state budget allocation of IDR44.9 trillion ($2.8 billion), focusing on completing legislative and judicial complexes, expanding infrastructure, and maintaining existing amenities.

Statistics:

  • IDRR219.9 trillion ($13.7 billion) - FDI in Indonesia in the first quarter of 2025 (Source: Ministry of Investment and Downstream Industry)
  • 12.7% - Year-on-year growth in FDI in Indonesia in the first quarter of 2025 (Source: Ministry of Investment and Downstream Industry)
  • 5.9% - Average annual growth rate of the construction industry in Indonesia from 2026 to 2029 (Source: Research and Markets)

Sources:

  • Ministry of Investment and Downstream Industry (no specific date mentioned)
  • Research and Markets (Q2 2025)
  • Danantara and Qatar partnership announcement (April 2025)

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