Indonesia's construction industry, which accounts for about ten percent of the country's gross domestic product (GDP), is experiencing turbulent times as the sector is impacted upon by three issues, namely higher minimum wages, higher subsidized fuel prices as well as the depreciating rupiah (against the US dollar). Concerns have arisen that a number of projects cannot be finished due to these issues. Moreover, companies may feel forced to dimiss workers in order to keep a healthy financial balance sheet.

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Indonesia's economic growth in the first quarter of 2016 was rather disappointing at 4.92 percent (y/y), below analyst estimates that averaged around 5 percent (y/y), due to slowing household consumption, private investors being in a wait-and-see mode, and relatively weak government spending (a usual phenomenon at the year-start). Indonesia's construction sector also grew weakish in Q1-2016. However, the construction sector still has good prospects in the years ahead on the back of the government's infrastructure projects.

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