Abstract
In time for the launch of BMI's infrastructure Q109 reports we have revised our construction data. The
data has been modified from 2008 onwards. This initiative stems from new methodology being
introduced in our forecasting method and aims to increase the relevance and reliability of BMI's
infrastructure data. BMI strives to be able to offer five year industry forecasts for the Indonesia Q109
report however that data is not currently available, but it will be updated in time for Q209. BMI therefore
will make its predictions based on data sets from 2009-2012.
For 2009 BMI forecasts that Indonesia's construction industry will be worth IDR 410,643bn
(US$45.20bn). The sector's value is forecast to continue increasing and we expect it to be worth
approximately IDR585,829bn (US$68.92bn) in 2012. We note that growth in Indonesia's construction
sector is slowing from its peak growth in 2006 of 9%. In 2008 year-on-year (y-o-y) growth slipped to
7.76% and we predict growth will slow further in 2009 at just 5.76%. Growth in Indonesia's construction
industry is however expected to pick-up momentum after this lull and we forecast it to stand at 6.86% in
2012.
Indonesia's construction sector is forecast to make up 7.45% of the country's total GDP and this is set to
expand to 7.79% in 2012. In 2009 we predict that the sector will employ 5.6mn workers and we believe
this number has upside potential and will reach 6.5mn in 2012. The construction industry will make up
approximately 5.66% of Indonesia's total workforce in 2009 and this share is expected to grow to 6.27%
in 2012.
BMI believes that the construction sector, not just domestically in Indonesia, but worldwide will be
buffeted by the global economic downturn and will lead to investors tightening their belts, leaving less
money to go towards funding infrastructure related projects, especially those in the real estate sphere.
This could see a serious decline in the number of companies available to participate in Private Public
Partnership (PPP) projects, which will lead to delays and in some case cancellations of proposed
infrastructure schemes.
In relation to Indonesia BMI has no news of specific projects that may be affected by the economic
downturn, it could be a case of watch this space. BMI however is confident that the big infrastructure
projects launched in 2008 especially projects associated with boosting Indonesia's power infrastructure,
where do to the fact that demand is outstripping supply, the country faces regular power shortages and
cuts.
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