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INDONESIA
REPORT
CONSTRUCTION MARKET
UPDATE
MEIKARTA
JAKARTA, INDONESIA
ARCHITECT: Macture
INDONESIA ECONOMY
Indonesia’s gross domestic product (GDP) rose prices since March this year. The December annual core
5.02 per cent year-on-year (y-o-y) in the third inflation rate, which excludes government-controlled
quarter of 2019. This marked the slowest growth and volatile prices, also cooled slightly to 3.02 per cent
since the second quarter of 2017. Although In- from 3.08 per cent in November 2019. Inflation stayed
donesia relies more on domestic demand, the within the central bank’s, Bank Indonesia (BI), target
economy is nevertheless affected by the global range for most of 2019, while it is projected to fall
economic slowdown driven by the trade war between within a range of 2 per cent to 4 per cent in 2020.
the United States and China.
Indonesian President Joko Widodo announced the
In the third quarter, household consumption, which site of the new capital on 26 August 2019, pending
makes up over half of Indonesia’s GDP, eased ratification by the Parliament. Design work and
slightly from 5.2 per cent growth to 5.01 masterplan will be completed by mid-2020,
per cent growth y-o-y, as reported by together with the draft Bill which will be put before the
Statistics Indonesia (BPS). Government spending Parliament. The shift of the Indonesian capital from
and investment have also slowed, along with flat Jakata to East Kalimantan is expected to cost US$33
exports and plunging import volumes. The Finance billion and construction is expected to complete within
Minister in August revised the GDP growth outlook for three to four years.
2019 downwards to 5.08 per cent, reflecting lowered
expectations. Following the strengthening of the Rupiah to an
over 18-month high in December, the central bank
Indonesia’s economy is expected to perform better in
advised it will allow the currency to strengthen
2020 on the back of improved commodity prices and
in line with market movements. It added that the
easing external pressures, economists said. This is in
Rupiah is “not yet overvalued”. The central bank in
line with the government’s aim to lift GDP growth to
2019 cut its main policy four times by a total of 100
5.3 per cent in 2020.
basis points (bps) and relaxed lending rules in an easing
cycle aimed at lifting GDP growth and will continue its
The annual inflation rate in December was 2.72 per
accommodative policy in 2020.
cent, representing the slowest increase in consumer
From January 2019 to August 2019, Indonesia In addition, depressed rental yield may also
completed 19 National Strategic Projects (PSN) with further discourage investors from entering the market,
a total investment of IDR87.7 trillion (US$6.21 billion). exacerbating the already weak market sentiment.
The projects consisted of three airports, five roads and
Prominent ongoing construction projects in
four special economic zones among others.
Indonesia include the Meikarta, Pakuwon Mixed
The Indonesian government targets to build 22 new Use Development, Pakubuwono Patra Luxury
infrastructure projects under the PSN in 2020 and Condominium and Balikpapan-Samarinda Toll Road.
have budgeted IDR120.21 trillion (US$8.58 billion) for A major project in the pipeline is the development of
the Public Works and Public Housing Ministry. This the new capital city in East Kalimantan, projected to
fund will be allocated for the development of water start in 2021 barring unforeseen circumstances that
resources infrastructure, habitation and housing across may delay the ambitious timeline.
the country.
Labour and material supply prices have remained
Fixed investment growth softened in the third
largely stable with fluctuations within a small range for
quarter of 2019. In line with the deceleration in
the year of 2019.
investment activity, particularly in building and
structures, the construction sector growth slowed
While travel restrictions put in place to prevent
modestly. Net direct investment fell from US$5.4
the spread of the coronavirus (COVID-19) have
billion in the second quarter to US$4.8 billion in the
prevented many Chinese workers from returning after
third quarter, partly supported by foreign investors
the Lunar New Year, the impact to the construction
inflows for toll roads construction.
industry appears to be minimal at present. Prolonged
Property market in the short to medium term remains restrictions may, however, lead to delays in projects
subdued as prevailing global economic headwinds such as the high-speed railway linking Jakarta to
continue to undermine investors’ confidence. The Bandung by China Railway International Group.
total inventory for strata-title apartments increased
by 1.7 per cent quarter-on-quarter (q-o-q) in the third Barring any unforeseen market conditions, the
quarter while the demand remained low. Experts anticipated construction tender price escalation in
believe the market will require more time to absorb Jakarta is in the order of 3 per cent for the year 2020.
the unsold units as the overall take-up rate has not
changed over the last quarters.
LABOUR PRICES
AVERAGE SUPPLY RATE IDR (‘000)
Concretor m 3
50,500 52,000 55,000 55,000
Formworker m 2
70,000 72,500 72,500 72,500
Glazer m 2
225,000 225,000 225,000 225,000
Exclusions: • Plant and Equipment • Transport • Wastage • Overheads and Profit • Import Tax • Value Added Tax (VAT)
Notes: All supply prices and labour rates stated above are only applicable for building construction projects in Jakarta.
High Tensile Steel Bars (10 - 40mm) kg 8,800 8,400 8,200 8,200
Exclusions: • Plant and Equipment • Transport • Wastage • Overheads and Profit • Tax Expenses (VAT)
Notes: All supply prices stated above are only applicable for building construction projects in Jakarta. Specific cost consultancy should be
sought for your particular factual situation prior to utilising this information.
CURRENCY EXCHANGE
UNITS PER USD
OFFICE
COMMERCIAL
RESIDENTIAL
INDUSTRIAL
CARPARK
Notes: Construction Floor Area (CFA) - The area of all building enclosed covered spaces measured to the outside face of external walls
including covered basement and above ground car park areas.
All Jakarta construction prices stated herein are as at 3rd Quarter 2019 and include a general allowance for foundation and external works.
The price ranges herein are indicative and due consideration should be given to the different specification, size, location and nature of each
project when utilising this information. The prices here may not fully reflect the extent of current market forces and tendering conditions.
Exclusions: • Land cost • Legal and professional fees • Development charges • Authority fees • Finance costs • Loose furniture, fittings and
works of art • Tenancy work • Site infrastructure work • Diversion of existing services • Resident site staff cost • Models and prototypes •
Future cost escalation • Import Tax • Value Added Tax (VAT)
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