Indonesia鈥檚 stable economic outlook, high infrastructure spending, and a rising middle class are some of the reasons why providers of energy efficiency solutions, particularly in the field of building technology, can expect to grow in Indonesia.
Those who have spent their last few months in Jakarta would have heard about the planned relocation of the nation鈥檚 capital city to the island of Kalimantan, right in the middle of this sprawling archipelago of some 17,000 islands.
It is not the first time Indonesians have heard about the plan, but if newly re-elected President Joko 鈥淛okowi鈥� Widodo鈥檚 recent visits to the possible new locations, as well as the concrete plans that have been drawn out by his ministers, are any indications, he might just be the President to get it done if not at least started.
The reason behind the relocation is obvious to those who have been to Jakarta. Traffic-congested, overpopulated, and rapidly sinking, the city is in dire need of a makeover. Taking out the government part of the capital city鈥檚 status as a center for government and business would give Jakarta a fighting chance.
This is where energy efficiency solutions providers come in. And not just in Jakarta, but also in regards to the possible development of the new Indonesian capital city should it come to pass in the upcoming years.
Stable economy outlook
The Asia Pacific region represents a major portion of global real estate, with about 40% of the world鈥檚 building supply. Emerging economies in the region continue to construct steady volumes of new commercial buildings, with Indonesia鈥檚 construction industry worth 10% of the country鈥檚 over 1 trillion dollars GDP.
However, such rapid growth comes with a cost. A 2018 report from the International Energy Agency stated that air conditioners in homes are offices and are the fastest growing use of energy in buildings and will drive peak electricity demand. This is very true for tropical Indonesia, which currently operates over 223 million air conditioner units, according to the same publication.
This further explains why private households and the commercial sector together account for around one fifth, and are already the third largest consumer after the transport- and industry sectors, of Indonesia's energy consumption. The building sector currently accounts for around 28% of total energy-related CO2 emissions, of which two thirds are emissions from electricity generation for use in buildings. Meanwhile, in conjunction with a continuing construction boom in Indonesia's urban centers, the available office space is expanding by more than 540,000 m虏 per year.
There is no question thus whether there is any demand, if not a need, for the necessary building technology. As cooling of buildings in Indonesia accounts for about 60% of the buildings total energy consumption, it will become much more important for building owners to use energy-efficient technologies after the already gradual reduction of electricity subsidies under the Jokowi government and the expected increase in electricity prices in the near future. In the absence of local players, these energy efficient technologies continue to be imported from abroad on a large scale.
In the areas of energy-efficient lighting and building automation Indonesia offers great potential for savings in electricity consumption. Just roughly 10% of buildings in Indonesia are currently equipped with LED technology for lighting. Furthermore, building automation systems (BAS) are increasingly used in buildings nowadays, leading to market growth of 10-15% per year.
Increased awareness
One of Jakarta鈥檚 main problems is the near-lack of spatial planning, not to mention runaway development following Indonesia鈥檚 booming economy in the later part of the 20th century. Back then, climate change was a mere notion and environmental awareness was not the global agenda as it is now. Today, Indonesia鈥檚 rising middle-class has brought as well a surge of awareness in regards to environmental concerns, of which the government is highly aware.
In regards to the planned new location of the capital city, President Jokowi鈥檚 chief planning authority, Mr. Bambang Brodjonegoro, have stated that the capital city must be 鈥淪mart, Green and Beautiful鈥�. Both Jakarta and the supposed new capital represent the myriad of opportunities available for energy efficiency solutions providers to take part in Indonesia鈥檚 emerging economy.
In facilitating German companies who are interested in taking part in Indonesia鈥檚 energy efficiency sector, EKONID is holding a business trip and business forum, as well as one-to-one discussions with potential business partners on energy efficiency and renewable energies in the building sector in Indonesia from November 11-15, 2019.
For more information regarding the Business Delegation, please visit