TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Building material start-ups push into construction business
The business-to-business platforms cannot directly bring down building material prices, but they could help property developers manage costs, according to an expert.
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
Jakarta pictured in 2019 (Shutterstock.com/Creativa Images)
B
uilding material prices have been on an upward trajectory since 2020, when COVID-19 hit the construction industry hard, data from Statistics Indonesia show.
This has moderated growth in the property sector, as Finance Minister Sri Mulyani explained on Feb. 7 when announcing last year’s state budget figures.
That, in turn, has put a damper on the growth of investment in productive assets, or gross fixed capital formation (GFCF), which the property business plays a significant role in.
New tech start-ups that have sprung up during the pandemic believe they can help construction firms cut costs in the procurement of materials, and while they currently occupy but a tiny niche in the industry, the nascent business-to-business platforms have raised at least US$8 million in funding from local and foreign investors.
According to Roshan Raj, a partner at Redseer Strategy Consultants, investor interest is driven by the huge total addressable market (TAM) of the country's construction sector and relatively high profitability.
"Indonesia's manufacturing market was about $148 billion in 2021. It accounted for more than three-fourths of the country's exports," Roshan told The Jakarta Post on Wednesday.
However, Roshan said those start-ups might not be able to directly offset inflationary pressure on building material prices.
