Coal

What are the Prospects for the Construction Industry in 2023?

Liga Asuransi – Dear Readers, how are you? Hopefully, your business this year will run smoothly, as expected.

To prepare companies for 2023, let’s look at what the challenges and opportunities will look like. This needs to be done so that the company’s management can take strategic steps to deal with it.

If there is an opportunity, the company can create a program to make the most of the opportunity. And vice versa, if what is seen is a challenge, then steps can also be taken to anticipate it.

As we often hear lately, the global economic outlook in 2023 is predicted to experience recession and financial instability due to slowing economic growth in developed countries with the strongest finances, such as Europe, China, to the United States.

Nonetheless, some countries are expected to be able to escape recession as those countries begin to recover, and inflationary pressures begin to weaken. Most countries suspected of running this recession are in the ASEAN region, one of which is Indonesia.

To find out what the opportunities for the Indonesian construction industry will look like in 2023, here below, we write some information that we collect from various sources.

If you are interested in this article, please share it with your colleagues so they understand, like you.

Construction Industry Opportunities in 2023

According to the Indonesian Chamber of Commerce and Industry (Kadin), the infrastructure construction industry in the next year is believed to remain prospective. It can still be a major contributor to the domestic economy next year.

Because this is a continuation of infrastructure projects that have begun to squirm after the Covid-19 pandemic, which has impacted the last 2 years, it is believed that the construction sector will still get new project opportunities even though the government starts to be selective next year.

The government still puts infrastructure development on the priority agenda. The evidence is that the funds for infrastructure in the Draft State Budget for Fiscal Year 2023 have increased.

Allocation for infrastructure increased by 7.75% from Rp 363.8 trillion this year to Rp 392 trillion next year. The budget will be used to target several areas.

The optimism of the construction industry’s opportunities in 2023 can be seen from the increase in the value of shares of several share stocks in the construction sector in the past month. Not only state-owned construction enterprises and their subsidiaries but private construction also felt the increase.

Another challenge is the increase in raw materials, including raw building materials. This condition can suppress the bottom line. Moreover, the performance of construction issuers has shown a tendency to grow on the top line, but it has yet to be significant.

The construction industry is expected to grow by 5.78 percent

National research manager of BCI Central, an international research company in the construction industry, Cahyono Siswanto ensures that the construction sector in Indonesia will continue to grow in 2023, even though the global economy is hit by uncertainty due to the slowing economy of several developed countries.

This follows an upward trend of 27.77 percent for 2021 compared to the previous year.

The total value of Indonesia’s construction market is estimated to reach IDR 332.95 trillion in 2023, consisting of 47.29 percent in the civil sector and 52.71 percent in the building sector.

Civil construction is estimated to increase by 10.13 percent in 2023, with IDR 157.46 trillion.

Civil Project

The civil projects that are the backbone in 2023 are roads and bridges, dams, ports, and civil works and power plants.

High Rise Building

The building sector is estimated to increase by 10.13 percent in 2023 to reach IDR 175.49 trillion.

Housing Projects

The housing and industrial project categories are expected to be the largest contributors to the total value of building construction in 2023, with a portion of 31.28 percent and 25.02 percent, respectively.

This market prospect is expected to provide an optimistic picture of the Indonesian construction industry in the next year to provide confidence for business people in Indonesia.

Industrial Sector

It should be noted that the industrial sector faced severe challenges during the pandemic in 2020, then faced sustained pressure during 2021, and a sharp rebound in 2022.

In 2022, the increase in the industrial sector was mainly driven by the growth of light industry and heavy engineering projects. It will remain strong for 2023 due to the ongoing trend in factory relocations to developing countries.

The government’s policy to pursue downstream industry and stop the export of raw materials has the potential to cause an increase in investment, especially in the smelting and refinery industries. Smelter plants began to appear in several areas outside Java.

Proximity to new industrial zones and major transportation corridors is an underlying factor in determining where demand for warehouse distribution facilities will continue to grow.

The growth of online services has helped increase the demand for light industrial premises because the facilities can be used for distribution and manufacturing.

Large enterprise l warehouses & logistics facilities have usually been built based on built-to-suit agreements. In contrast, general companies prefer standard warehouse buildings that typically have more compact facilities & smaller warehouse space.

Infrastructure and Transport

Infrastructure & transport projects have risen sharply since 2021 as infrastructure investment emerges. The company’s development projects will continue to be a key driver and support further growth.

The priority policy for 2023 is focused on accelerating the provision of infrastructure and selected national strategic projects that have entered the construction stage must be completed in the first semester of 2024.

2023 & 2024 will be the year of accelerating the completion of the construction of many toll roads in various regions to improve connectivity between regions and the community’s economy.

The government will still allocate significant budgets for new infrastructure development projects throughout the region, including dams, ports, and transportation facilities.

Risk Management and Project Insurance

According to the insurance industry, construction projects belong to the category of high-risk work. Many potential risks can occur over the life of the project. Starting from the risk of fires, project accidents caused by construction equipment, and natural disasters such as floods, earthquakes, landslides, and others.

To protect your project, ensure it is guaranteed by a strong and healthy insurance company so that it can be replaced with the maximum value in the event of an accident.

The best way to take care of project insurance is to use the services of an insurance brokerage company. 

Insurance brokers are insurance experts who help you design a suitable insurance program, find the best insurance company, negotiate with competitive premium values and help you in the event of a claim.

One of the best insurance brokerage companies in Indonesia is L&G Insurance Broker. For all your project insurance needs, contact L&G right now!

Conclusion

Even though it is overshadowed by the world economic recession triggered by inflation, because Indonesia’s financial foundation has been relatively strong after passing the pandemic, construction business opportunities in Indonesia remain good.

One of the driving factors is the government’s commitment to continue the construction of large amounts of infrastructure.

In addition, construction is also growing in the industrial sector, where the government encourages the construction of industrial facilities to manage raw materials.

The construction value for construction projects is estimated to increase in 2023 with a value of IDR 175.28 trillion or 9.99% compared to 2022. The initial value of civil construction is estimated to increase slightly by 1.44% in 2023 and reach IDR 157.66 trillion.

By category, the building construction market shows that industry and housing are the main drivers in 2022, followed by offices and retail as emerging categories.

New industrial estates with favorable incentives significantly attract foreign investors and accelerate industrial projects.

Souces:

  1. https://investasi.kontan.co.id/news/anggaran-infrastruktur-2023-naik-cermati-prospek-saham-emiten-konstruksi-berikut-ini
  2. https://www.antaranews.com/berita/3281319/periset-pastikan-sektor-konstruksi-tetap-tumbuh-pada-2023
  3. https://www.cnbcindonesia.com/market/20221108174818-19-386148/adu-kuat-pondasi-emiten-konstruksi

 

LOOKING FOR INSURANCE PRODUCTS? DON’T WASTE YOUR TIME AND CALL US RIGHT NOW

24 HOURS L&G HOTLINE: 0811-8507-773 (CALL – WHATSAPP – SMS)

website: lngrisk.co.id

E-mail: customer.support@lngrisk.co.id

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

To Top
Yes...
You are WITH the right expert to get the best insurance in Indonesia
Contact Us NOW!
or
Mhd. Taufik Arifin ANZIIF (Snr. Assoc) CIIB Insurance Expert with 40 years of experience
OJK Registered KEP-667/KM.10/2012
Contact Us NOW!
You are WITH the right expert to get the best insurance in Indonesia
Yes...