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Infrastructure projects to be among fastest growing in Indonesia

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The pace of expansion in Indonesia’s economy has slowed recently. Nevertheless, the country’s construction industry is set for continued fast growth, with investment in infrastructure projects to be the main driver of growth.

Indonesia’s construction industry will expand at an annual rate of 7.9% in 2015-2019, an acceleration from 6.6% over the past five years. The industry will stand at US$287 billion in 2019, up from US$196 billion in 2014. Infrastructure projects are expected to be the main driver of growth as a result of increased government investment in the face of a rising population, greater urbanisation, and the participation of the private sector through PPPs, which will support infrastructure construction activity over the forecast period.

The government will also offer more infrastructure projects under the PPP model, to improve the country's rundown infrastructure. According to Indonesia’s National Development Planning Ministry, the government plans to offer 43 infrastructure construction projects with a value of US$52 billion to the private sector in 2015. Projects include the construction of monorail, ports, rail, airports, toll roads and water infrastructure.

“However, there are some risks to the positive outlook for the construction industry in Indonesia, namely rising costs associated with capacity constraints and shortages in supply of building materials,” says Sina Zavertha, Economist at Timetric’s CIC.

Adapted from press release by Joseph Green

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