Indonesia Construction Industry Overview


The construction sector, which maintains a weight greater than 10% of Indonesia's GDP, 10.8% of GDP in 2019, employs 6% of the employed population, also takes on special importance.

The sector has shown strong dynamism in recent years, its contribution to GDP Increase compared to the previous year, although its growth suffered a slight deceleration in the last period, growing by 5.8%, with a strong advance in residential and non-residential construction, with important construction groups in the country, many of them state-owned and present prominently in non-residential building and civil works.

On the other hand, important groups of real estate developers and developers of residential complexes and large shopping centers that have grown exponentially in the country in the last 20 years, mainly in Jakarta and nearby centers, but also in other cities such as Bandung, Surabaya, Medan, Balikpapan or Makassar. The sector is expected to continue growing in the medium term.


A slowed challenge


One of the challenges facing the government is to promote investment in infrastructure, since the last decade, and despite the ambitious projects sent in 2011 in the so-called “Master Plan for the Acceleration and Expansion of economic development of Indonesia 2011-2025” has been scarce. In addition, in terms of building construction, both residential and non-residential, it has undergone a very important development in recent years.


Insufficiencies in the Indonesian construction industry


In Indonesia, the construction industry produces a wide range of projects, and the companies are equally diverse. However, the vast majority of on-site construction companies are small and local. Despite globalization and the existence of the international construction industry, the bulk of construction activity continues to be carried out by local companies. There is a tendency among construction companies (as in other industries) to outsource the supply of goods and services required in the production process. Construction materials, plants, and equipment are often bought or rented from other companies. Subcontractors provide the specialized services and employment agencies supply the labour. Design and engineering services are also provided by independent professional entities.


Technology in the Indonesian construction industry


Technological changes have occurred in the industry, in particular the increasing use of green technologies. To adapt to these changes, it is necessary to provide training to workers to acquire professional skills, and management training to companies. The decentralization of government activities related to construction places new demands on local authorities, who participate in numerous construction activities through direct management or other private contractor companies. It is also necessary to develop the capacity of local authorities in respect of labour issues in construction.


The possibilities of streamlining processes with AI


The construction sector is no stranger to the wave of digitization that is transforming the business world. Indeed, the industry faces an opportunity to reinvent itself and make the most of the benefits of automation. The reduction of costs in the digital evolution, the challenges in terms of personnel, and the growing complexity of business are forcing companies in the sector to fully enter a new paradigm in which automated processes will allow great advances in terms of efficiency operational. Automation, defined as the use of machines and equipment that perform tasks without the need for human control, is perhaps the most promising because of the benefits it offers in terms of operational efficiency.


Construction industry of Indonesia would definitely require proactive plan to remain competitive at global stage and ASEAN5 marketplaces. That can be achieved by adopting Computer Vision (CV) and Artificial Intelligence (AI) to manage their major or minor each kind of construction projects. All the stakeholders of construction industry (including policy makers, private or public funded institutions, nongovernmental organizations, innovation experts and business leaders) should be prepared for substantial and innovative changes related to the future of construction industry.


And, that can also resolve the problem of managing workforce with limited resources and get 100% productivity from available workforce. viAct, being the leading construction automation solution provider in Asia is now spreading its network in Indonesia too to help the construction industry of Indonesia and their workforce to enhance the safety and productivity in their construction projects. And, these AI enabled automations will help Indonesia’s Construction Sector to grow and remain competitive at world level.


Thanks to automation, it is estimated that a reduction in the processing time of up to 98% is possible, a cost-saving that can reach 35%, and a decrease in an inventory level of 10%. In addition, it is estimated that an absolute elimination of error rates is possible, thus achieving 100% accuracy.

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