Building Indonesia’s future: Unblocking the pipeline of infrastructure projects

PwC Indonesia analysis of infrastructure investment plans in Indonesia over the period to 2025. The Government has set very ambitious targets for investment by the public and private sectors and the forecasts indicate that actual expenditure will fall short of Government targets over the next five years.

Key points

Total infrastructure spend is estimated to have been $57.3bn in 2014. This figure is projected to increase to $138.6bn by 2025.
The 2025 figure represents a downward revision from our previous forecast. This is largely driven by a revision of historical estimates and spending. Compound annual growth rate to 2025 remains approximately the same at 8.4%. The outlook for extraction and manufacturing investment has weakened since our previous forecast; this is offset by a stronger outlook for telecoms and some transport subsector spending (ports, rail).
Infrastructure spend was equivalent to 6.4% of GDP in 2014. The new administration’s infrastructure programme is expected to accelerate spending before 2019, peaking at 7.7% of GDP in 2017. As the Indonesian economy matures, infrastructure spend in Indonesia will likely account for a slightly lower proportion of GDP, falling to 5.3% by 2025.
Indonesia’s share of regional and global infrastructure spend is expected to remain broadly stable throughout the forecast period, at around 4% and 2% respectively.
Investment in health and education infrastructure is expected to grow particularly strongly from a low base – by more than 10% per year on average between 2015 and 2025. As such, social infrastructure is expected to account for 10% of total spend by 2025, up from 7% in 2014.