According to a recent study by LPEM, the research institute of the Economic and Business Faculty at the University of Indonesia, the property, real estate, and building construction sectors contributed 14.63% to Indonesia's national gross domestic product (GDP) in 2022. The study revealed that these sectors collectively generated Rp 2,865 trillion ($191.9 million) in the GDP last year, while in 2020, they represented 16.3% of the national GDP, which amounted to approximately Rp 2,516 trillion.
During the period between 2018 and 2022, the mentioned sectors and their multiplier effects generated an estimated Rp 185 trillion in tax revenue annually for the central government. Uka Wikarya, a researcher at LPEM, explained at a conference held in Jakarta on Monday that this implies that on average, these sectors contribute around 9.26% to the state budget.
According to Uka, the property, real estate, and housing sectors have provided immense benefits to sub-national governments across the Indonesian archipelago. From 2018 to 2022, taxes generated by these industries amounted to Rp 464.7 trillion, which equals about Rp 92.9 trillion annually or 31.86% of the sub-national governments' locally generated income. In 2022, these sectors created employment opportunities for 13.8 million people, representing 9.61% of the national workforce.
The study found that the poverty rate in Indonesia would have increased to 17.37% without the contribution of these sectors, as of last year, 9.54% of the population lived below the poverty line.
Uka emphasized that the contribution of the property industry to this year's GDP would depend on its growth and that of the national economy. He also suggested that the industry could increase its contribution by penetrating a larger market and offering more affordable housing options, which would require incentives, such as subsidies to reduce production costs.
Budiarsa Sastrawinata, the head of the integrated property department at the Indonesian Chamber of Commerce and Industry (Kadin), expressed optimism about the sector's growth in 2023. He stated that the housing industry intersects with 183 other sectors, and if it moves, all other industries in the country would follow suit. He also noted that all housing products in the industry are locally produced, providing a boost to Indonesia's economy.