INDONESIA CONSTRUCTION MATERIALS MARKET

Indonesia Construction Materials Market is estimated to grow at a CAGR of 5.6% during the forecast period till 2031 owing to the increasing government efforts to stimulate infrastructure development along with the thriving residential sector in the country.

Major Indonesia Construction Materials Market Drivers and Emerging Trends

Indonesia construction materials market size is expanding due to substantial government investments in infrastructure development which offers plentiful opportunities for domestic and foreign investors. The government is actively promoting private investment in the construction sector, launching the National Economy Recovery program with a USD 50.3 billion budget for social development and infrastructure projects that aims to foster economic growth and generate employment opportunities. Furthermore, the government has implemented VAT exemptions for developers involved in constructing low-cost housing projects.

In addition, the government’s focus on infrastructure development particularly in transportation and energy sectors along with the growth of residential sector fueled by the robust economy, increasing middle-class demographics, and urban development, is driving the requirement for construction materials. The government efforts to stimulate infrastructure development which includes the ambitious “One Million Homes” program targeting the annual construction of one million homes and aims to support affordable housing for low-income families, are crucial in bolstering the construction materials demand. Meanwhile, there is an emerging trend of environmentally friendly materials which are influencing the growth of the market. The increasing demand for modular or prefabricated construction materials is also further bolstering market growth.

However, one of the potential challenges to market growth is insufficient infrastructure. The logistics infrastructure in the country is still developing which causes inefficiencies and obstacles in the transportation of construction materials. Moreover, the industry encounters challenges associated with regulations including intricate land permit procedures and issues of corruption. Other obstacles that can hinder market growth include material shortages caused by disruptions in the supply chain, employee safety concerns, decreased investment in the real estate industry, challenges in electricity provision, environmental preservation efforts, and a shortage of skilled workers. These factors collectively delay construction timelines and affect the quality of materials combined with natural disasters which might also escalate project costs. Additionally, obtaining multiple clearances from numerous authorities including those for environmental preservation, electricity, land use, among others, adds to administrative challenges and project expenses.

Furthermore, despite significant efforts to increase production capacity, the construction materials sector in the country is unable to satisfy the demand from local construction projects. While foreign companies could potentially fill this gap, the government’s efforts to curtail imports may restrict such opportunities. Rupiah depreciation relative to the dollar has also escalated the expenses associated with imported construction materials. As infrastructure projects progress, the demand for construction materials will escalate, which highlights the critical need for domestic expansion investment. Therefore, construction material suppliers will be well-positioned to leverage these opportunities through capacity growth.

Based on the product type, the market can be segmented into aggregates, metal, bricks, cement, and others. The aggregates are expected to lead the segment as the surge in renovation and refurbishment industry is leading to an increased need for construction aggregates in both residential and commercial construction projects. Additionally, industrialization and urbanization as macroeconomic factors will persist in generating considerable demand. Construction aggregates are experiencing high demand due to the rise in tourism and the need for shopping centers, modern workplaces, and commercial structures. The robust residential construction sector also contributes significantly to this demand.

Based on application, the segmentation includes residential, commercial, industrial, among other sectors. The residential sector is experiencing significant growth and holds a dominant position in the market driven by the expanding economy, increasing middle-class population, and rapid urbanization.

The market is fiercely competitive which attracts domestic and foreign companies eager to secure their market share. Several leading companies in the market are PT Semen Indonesia, PT Krakatau Steel, among others.

Segments covered in the Report:

The Indonesia Construction Materials Market has been segmented on the basis of material type and by end-use. Based on the material type, the market is segmented into aggregates, cement, bricks and blocks, metals, others. Based on the end-use, the market is segmented into residential, commercial, industrial.

Market Segmentation

Indonesia Construction Materials Market by Material Type 

• • Aggregates
  • Cement
  • Bricks and Blocks
  • Metals
  • Others

Indonesia Construction Materials Market by End-use             

• • Residential
  • Commercial
  • Industrial