With its reliance on the domestic market and government-funded projects, the building materials sector should prove relatively insulated from global economic risks. While the threat of localised overheating in the property market must not be overlooked, square metre prices in general are still low by international comparison and urbanization in Indonesia has a long way to go yet. Moreover, the country is still catching up on infrastructure development after long years of neglect. Neither should the economic slowdown in 2013 jeopardise long-term demand for building materials, because many of the stalled projects will resume once inflation and GDP growth stabilize.
The building materials sector has seen a rapid increase in investment in recent years. In 2012, the non-metallic mineral industry (which includes the production of many building materials and their ingredients) attracted 10.7 trillion RP (around $1 billion USD) in domestic direct investment in 2012 – more than any other sector apart from food, according to the Indonesian Investment Coordinating Board (BKPM). As supply has nevertheless struggled to keep up with rising demand, wholesale prices of construction materials more than doubled from 2005 to 2012, according to Statistics Indonesia (BPS).