Executive Summary

Key insights and market outlook

The Indonesian construction sector is poised for significant changes in 2026 as state-owned enterprises (BUMN) dominance is expected to decline. The shift is driven by government policies favoring private sector participation, particularly small and medium enterprises (UMKM). Key factors include increased infrastructure spending and regulations limiting BUMN involvement in smaller projects ¹

. Meanwhile, the Ministry of BUMN has been downgraded to a regulatory body, changing its role in overseeing state-owned enterprises ²³.

Full Analysis

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Deep Dive Analysis

Indonesia's Construction Sector to See Shift as BUMN Dominance Wanes

Changing Landscape in Construction Business

The Indonesian construction sector is on the cusp of a significant transformation entering 2026. According to Errika Ferdinata, Deputy Secretary General of Gabungan Konstruksi Nasional Indonesia (Gapensi), the business landscape is expected to shift away from its historical dominance by state-owned construction companies (BUMN Karya) ¹

.

Increased Private Sector Participation

The shift is primarily driven by government policies that are creating opportunities for private sector players, particularly small and medium-sized construction enterprises (UMKM). Key factors supporting this transition include:

Government budget allocation: The 2026 State Budget (APBN) is seen as providing clear direction for development projects, particularly in areas such as village infrastructure, housing, and sanitation, which typically involve smaller contractors ¹
Source 1
https://industri.kontan.co.id/news/dominasi-bumn-karya-di-bisnis-konstruksi-diprediksi-mulai-menyusut-pada-tahun-2-26
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Regulatory changes: New regulations prohibiting BUMN or their subsidiaries from bidding on projects below Rp 100 billion are opening up opportunities for private and regional contractors.

Restructuring of BUMN Ministry

In a related development, the Ministry of State-Owned Enterprises (BUMN) has been downgraded to a regulatory body called Badan Pengaturan BUMN (BP BUMN) as of October 2025 ²

³. This change follows the enactment of Law No. 16/2025 amending the BUMN Law. The new regulatory body's primary tasks include setting policies, regulating, guiding, coordinating, and supervising the management of state-owned enterprises ².

Impact on Existing Employees

The transition of the BUMN Ministry to BP BUMN has implications for its existing employees. According to Presidential Regulation No. 105/2025, all employees of the former Ministry will be automatically transferred to the new regulatory body ³

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References