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Real estate contributes 14.63% to Indonesia's GDP, real estate to support the country's economic growth

Real estate contributes 14.63% to Indonesia's GDP, real estate to support the country's economic growth

Real estate contributes 14.63% to Indonesia's GDP, real estate to support the country's economic growth

The real estate, real estate and construction sectors contributed to the national gross domestic product (GDP) at 14.63 percent in 2022, according to the LPEM Research Institute of the Faculty of Economics and Business at the University of Indonesia. The study found that the three sectors together generated about Rp 2.865 trillion ($ 191.9 million) of GDP last year. In 2020, these sectors accounted for 16.3 percent of the national GDP, which is about 2.516 trillion rupees. Between 2018 and 2022, these sectors, together with their multiplier effects, generated about Rp 185 trillion in tax revenue to the central government every year. "This means that these sectors contribute about 9.26 percent to the state budget on average," said LPEM researcher Uka Wicarya at a conference in Jakarta on Monday.

The real estate, real estate and housing sectors are a boon to local governments across the archipelago. The local revenue generated from taxes in these sectors amounted to Rp 464.7 trillion in 2018-2022. This amounts to about Rp92.9 trillion per year or about 31.86 percent of local revenue for local governments.

In 2022, these three sectors created new jobs for 13.8 million people, about 9.61 percent of the national labor force. At the end of last year, 9.54 percent of Indonesia's population lived below the poverty line.

Without these sectors, the poverty rate could have risen to 17.37 percent, the study found.

Uka told reporters that the projected contribution to GDP for this year would depend on the growth of both the economy and the real estate industry. "If the real estate sector grows faster than the national economy, its contribution to the national GDP will exceed 14.63 percent. But for this to happen, we need to penetrate a bigger market so that end consumers can buy homes at a more affordable price," Uka said. "And that requires incentives, including subsidies, to lower production costs and provide more affordable housing."

Budiarsa Sastravinata

Budiarsa Sastrawinata, head of the integrated real estate department at the Indonesian Chamber of Commerce and Industry (Kadin), said he is optimistic about the sector's growth in 2023. "The housing industry overlaps with 183 other sectors. If we focus only on housing, especially for the middle class, 100 percent of the products in this industry are domestically produced. None of them are imported. So if the housing sector is moving, so are all other sectors in the country," Budiarsa said.

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