The Future of Construction in Indonesia: Embracing True Sustainability

Sustainable construction in Indonesia is gaining attention as the industry seeks to balance rapid infrastructure growth with environmental responsibility. This approach promotes sustainability through regulations, innovation, and long-term development goals.

Regulatory Framework and Data on Construction Service Industry

Law Number 2 of 2017 on Construction Services (“Construction Services Law”) defined construction works as the overall or part of activities consisting of development, operation, maintenance, demolition, and redevelopment of a building.

In line with the increasing economic activity, infrastructure demands, globalization, and other related factors, the construction industry has also continued to grow. Based on the Construction Indicators data published by the Indonesian Central Bureau of Statistics, Quarter II-2025, the index of completed construction value shows a significant increase compared to the same period in the previous year. The report also notes that this condition reflects “the strengthening dynamic of the construction sector.” Furthermore, according to a Press Release issued by the Coordinating Ministry for Economic Affairs on 8 May 2025, it is also mentioned that the construction industry is one of the key sectors contributing substantially to the national economy.

The development of the construction industry has undeniably had a significant impact, particularly on the environment. According to the Global Status Report for Buildings and Construction 2024-2025, published by the United Nation Environment Programme (UNEP) and the Global Alliance for Buildings and Construction (GlobalABC), the construction industry is responsible for at least 34% of the global carbon dioxide emissions. Even the impact in Indonesia itself, a Press Release issued by the Ministry of Environment/Environmental Control Agency dated June 3, 2025, further reported that dust generated from construction activities contributes approximately 13% of air pollution in the Greater Jakarta.

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To prevent these worsening impacts of construction activities, it is therefore essential to implement what is known as sustainable construction. The concept of sustainable construction was first introduced by the United Nations through Agenda 21 in 1992 and was subsequently further developed under Agenda 2030 for Sustainable Development. While the UN stated that, as a constantly evolving concept, there is no universal definition of sustainable construction, sustainable construction itself essentially refers to a construction activity that integrates environmental, economic, and social considerations to achieve long-term sustainability.

Strengthening Regulatory Framework on Construction Service Sustainability

Indonesia has also established a regulatory framework governing the concept of sustainable construction. Referring to the Government Regulation Number 14 of 2021 on the Amendment to Government Regulation Number 22 of 2020 on the Implementation of Law Number 2 of 2017 on Construction Services (“GR on Construction Service”) jo. the Ministry of Public Works and Public Housing Number 9 of 2021 on Guidelines of Sustainable Construction Implementation (“MoPWH Reg. on Sustainable Construction”), sustainable construction is defined as an approach in the implementation of construction services for the development of buildings and/or civil structures that adheres to the principles of sustainability, resource efficiency, and the life cycle of the building, in order to achieve economic, social, and environmental objectives both in the present and in the future.

However, despite the existing regulatory framework, the implementation of sustainable construction in Indonesia in practice is far from being considered optimally implemented. From regulatory weakness to issues of practical effectiveness, various challenges continue to hinder the comprehensive application of this sustainable construction in Indonesia.

Key Aspects of Sustainable Construction

It should be noted that aspects of sustainable construction are not only limited to environmental concerns, but it is equally important to consider other aspects. In line with the objectives outlined in the Agenda 21 document, sustainable construction seeks to adopt policies and technologies and to exchange information on them in order to enable the construction sector to meet human settlement development goals, while avoiding harmful side-effects on human health and on the biosphere, and, second, to enhance the employment generation capacity of the construction sector. In this matter, the governments should also work in close collaboration with the private sector in achieving these objectives.

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In Indonesia itself, this understanding aligns with the provisions set forth in the GR on Construction Service and the MoPWH Reg. on Sustainable Construction. That sustainable construction should be implemented based on principles which ensure economic feasibility and the improvement of public welfare, environmental preservation, and the reduction of social disparities. More specifically, the scope of the sustainable principles referred to in sustainable construction is as follows:

• Alignment of objectives, understanding, and action plans;
• Fulfilment of safety, security, health, and sustainability standards;
• Reduction in the use of resources, including land, materials, water, natural resources, and human resources;
• Reduction in the generation of waste, both physical and non-physical;
• Reuse of resources that have been previously used;
• Use of resources derived from recycling;
• Protection and management of the environment through conservation efforts;
• Mitigation of risks related to safety, health, climate change, and disasters;
• Orientation toward the life cycle;
• Orientation toward achieving the desired quality;
• Technological innovation for continuous improvement; and
• Institutional, leadership, and management support in implementation.

In addition to outlining the scope and key objectives of sustainable construction, this framework also highlights its distinctions from the conventional construction. Whereas, what sets sustainable construction apart is that its implementation is primarily focused on these economic, social, and environmental aspects, rather than solely on structural or functional considerations typical of conventional construction.

Another distinction from conventional construction lies in the predicate system given to the sustainable construction projects. This predicate is granted by the Minister of Public Works and Public Housing, based on an assessment of a project’s performance, reflecting the extent to which the building has implemented sustainable construction technical requirements at each stage of its execution. The predicates are categorized into three levels, namely:

• Main Predicate (Predikat Utama);
• Intermediate Predicate (Predikat Madya); and
• Basic Predicate (Predikat Pratama).

This assessment is conducted at every stage of construction service implementation, including general planning, programming, construction consultancy, construction execution, building, operation and maintenance, and demolition. Based on the assigned predicate, the evaluation reflects the conduct of the construction activities and their compliance with the aspects applied in sustainable construction.

Receiving such a predicate provides added value and incentives from the government as recognition of the implementation of sustainable construction principles, as well as to encourage further adoption of sustainable construction practices. Among these benefits, particularly in the financing sector, there will be easier access to environmentally focused funding (green fund). Additionally, the application of sustainable construction can enhance a company’s reputation, as well as lead to resource savings and reductions in building operation expenses.

Implementation of Sustainable Construction in Indonesia

While still limited in practice, several construction projects in Indonesia have already adopted sustainable construction principles. The implementation of construction in the Ibu Kota Negara (IKN) has also been reported to follow sustainable construction practices. This includes the use of low emission materials, such as green cement (low carbon cement), carbon reducing paints, and other green construction materials. In other projects, PT. Wijaya Karya (Persero), Tbk has proven to have implemented sustainable construction in several of its projects, which has been given Predikat Utama in recognition of compliance with the technical requirements for sustainable construction as stipulated under the MoPWH Reg. on Sustainable Construction.

Another example, highlighting on the environmental and social aspects, PT. Cipta Sanalida Utama, has also implemented sustainable construction practices into the Jayapura LPG Terminal National Strategic Projects. These include the use of low-emission materials, the application of a Terminal Automation System (TAS) to optimize energy usage, the use of recycled materials, and explosion-proof construction materials. These practices are accompanied by considerations of social impacts, aiming to mitigate potential social risks. Moreover, the company has reportedly contributed to local economic development by employing community members and has promoted workplace diversity through the inclusion of persons with disabilities.

Sustainable Construction Practices in Singapore

When comparing its implementation in other countries, the active adoption of sustainable construction policies is not a new phenomenon. In Singapore, for example, there are various stringent regulations and policies that promote and ensure safety, quality, and sustainability in every construction project. Since 2005, the Building and Construction Authority (“BCA”) of Singapore, an independent agency under the Singapore Ministry of National Development, has issued the Green Mark for Buildings Scheme, which encourages sustainable building practices. Subsequently, this initiative was further developed through the Singapore Green Building Masterplan (“SGBMP”), which was first issued in 2006.

As stated under the newest SGBMP document in 2022, the SGBMP aims to act as:

“A leading green Built Environment sector mitigating climate change and providing a healthy, livable and sustainable Built Environment for all.”

Through the SGBMP, it was further emphasized that the Singaporean government will continue to promote sustainable construction until it becomes a mainstream practice in Singapore. The three key objectives to be achieved through the SGBMP, namely:

• 80% of buildings by Gross Floor Area (“GFA”) to be green by 2030;
• 80% of new developments by GFA to be Super Low Energy (SLE) buildings from 2030; dan
• 80% improvement in energy efficiency (from 2005 levels) for best-in-class green buildings by 2030.

In order to support the implementation of these objectives, the Singapore government also provides and promotes various incentive schemes, including:

• Green Mark Incentive Scheme for Existing Buildings 2.0 (GMIS-EB 2.0);
• Built Environment Transformation GFA Incentive Scheme; and
• Enhanced Green Buildings Innovation Cluster funding (GBIC 2.0).

Challenges on the Implementation of Sustainable Construction in Indonesia

Observing the implemented sustainable construction policies in Singapore, it is evident that the Singaporean government has established concrete goals and a clear vision, in implementation of sustainable construction practices. In comparison, the implementation of sustainable construction in Indonesia is clearly far from optimal. There are still a lot of gaps in the regulations and policies by the Indonesian Government, which should have been developed continuously in order to take concrete steps toward a more serious and maximum implementation of sustainable construction.

Despite the existing regulations supporting the implementation of sustainable construction, in reality, however, such regulations, starting from the Construction Service Law, GR on Construction Service, to the MoPWH Reg. on Sustainable Construction, are still deemed inadequate. The inadequacy of the necessary provisions is actually reflected in the fact that only a small number of construction projects currently adopt the full concept of sustainable construction. Moreover, it also appears that sustainability has yet to become the primary focus within Indonesia’s construction Industry at the moment.

In addition, the full implementation of sustainable construction continues to face various challenges, including those arising from the regulatory framework itself. As when referring to the provision in Article 3 of the MoPWH Reg. on Sustainable Construction, it was stipulated that:

“The provision of construction services for the development of buildings and/or civil structures must adhere to the principles of Sustainable Construction.”

The use of the word “must” (“harus”) in the mentioned provision above should have been interpreted as an obligation for construction service providers to implement sustainable construction. In practice, however, there are no sanctions or consequences if this provision is not fulfilled. Therefore, it is unclear whether the government intends to make this policy mandatory or merely voluntary. Given the current situation, consequently, an execution of construction projects without adopting sustainable construction, which is supposedly mandatory, such action will not pose any legal issues for the relevant construction service providers.

Additionally, the incentives for implementing sustainable construction in Indonesia also remain unclear. Where in reality, the execution of sustainable construction requires more aspects to be taken into consideration compared to the execution of conventional construction. With these “extra steps,” it is inevitable that the construction service providers would need more labor, resources, and costs in order to fully meet the requirements in implementing sustainable construction. Thus, government support will be very crucial. With a clear incentive policy scheme that can also benefit construction service providers, as has been implemented by the Singapore Government, this will gradually encourage the optimization of sustainable construction in Indonesia.

Manifesting Construction Service Sustainability

The various impacts of construction activities have prompted countries to implement sustainable construction. This is undertaken to promote the development of the construction industry, without having to compromise the economic, social, and environmental aspects. To achieve this goal, the Indonesia government needs to demonstrate a more serious commitment in promoting the implementation of sustainable construction, including through concrete steps with clear objectives. The government’s commitment should be demonstrated through adequate regulations. However, in fact, even with the existence of regulations, the Indonesian government’s goals for this policy remain unclear. In addition, the establishment of incentive policies will also become crucial to encourage sustainable construction. Without the government’s support, policies, and concrete steps, sustainable construction in Indonesia will only remain as a concept, without a real, effective implementation that will not only benefit the construction industry, but also the environment, public, and economic growth.

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Sources:

• Law Number 2 of 2017 on Construction Services
• Government Regulation Number 14 of 2021 on the Amendment to Government Regulation Number 22 of 2020 on the Implementation of Law Number 2 of 2017 on Construction Services;
• Ministry of Public Works and Public Housing Number 9 of 2021 on Guidelines of Sustainable Construction Implementation
• United Nations Sustainable Development, United Nations Conference on Environment and Development. Agenda 21: Programme Action for Sustainable Development. UNCED, 1992
• United Nations General Assembly. Transforming our world: the 2030 Agenda for Sustainable Development. New York: United Nations, 2015
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• Indonesian Central Bureau of Statistics. Construction Indicators Quarter II-2025. Jakarta: BPS, 2025
• Building Construction Authority. Sustainable Construction: Materials for Buildings. Singapore: BCA, 2007
• Building Construction Authority. Singapore Green Building Masterplan. Ed. 4. Singapore: BCA, 2022
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