By: Amril Taufik Gobel

Vice President Procurement EPC and Investment,

Supply Chain Management Division PT Nindya Karya

In the midst of the rise of development that occurred throughout Indonesia, the construction sector emerged as a major economic force with market values ​​reaching USD 233.76 billion in 2023 and was estimated to surge up to USD 535.98 billion in 2030. However, behind the glittering of large projects such as skyscrapers and giant infrastructure, there are environmental challenges that cannot be ignored.

Nearly 40% of the total carbon emissions come from the building sector. This sector also contributed a significant increase in carbon traces, construction waste, and excessive exploitation of natural resources. This requires transformation in the construction industry to a more environmentally friendly and sustainable approach.

Growth of the Indonesian Construction Industry

The construction industry in Indonesia is now experiencing an extraordinary acceleration of growth. In 2024 alone, this sector grew by 6.4%, with an output value of IDR 2,223.7 trillion. Projection from 2025 to 2027 also shows an annual average growth trend of 6.4%. The government has budgeted more than IDR 423 trillion for infrastructure development, especially in the transportation sector, renewable energy, and housing.

With a contribution of 10-11% to Gross Domestic Product (GDP), the construction sector absorbs large amounts of labor and is a driving force for the national economy. Large projects such as the Trans Java Toll Road and the Development of the Capital of the Archipelago (IKN) have strengthened Indonesia's position as one of the most active construction markets in Southeast Asia.

However, this rapid development also has a negative impact on the environment. Inefficient energy consumption - such as the fact that 20% of low -income household expenditures are used for electricity - a sign of energy waste. On the other hand, passing heavy vehicles, the use of heavy equipment, and a pile of construction waste adds to the urgent ecological problems to be overcome.

Green Supply Chain - Change to Sustainable Construction

Green Supply Chain Management (GSCM) in the Indonesian Construction Sector is not just a modern trend, but is a strategic approach that unites environmental aspects into the entire supply chain process. The environmentally friendly building market in Indonesia is estimated to grow at an annual rate of more than 6% between 2023 to 2028. This growth is driven by increased public awareness and government policies that encourage a reduction in carbon emissions from the construction sector.

The GSCM approach includes the entire life cycle of a project, from the planning and design stage, the selection of more environmentally friendly materials, energy -efficient development processes, to waste management and rearrangement of building materials.

Programs such as EDGE have succeeded in certifying more than 2.3 million square meters of buildings in Indonesia, reducing carbon emissions by 67,000 tons every year - after planting around 1.1 million trees.

The application of this concept requires intensive collaboration from all parties involved, ranging from contractors, suppliers, to the surrounding community. For example, housing construction in the outskirts of Jakarta is now not only pursuing time targets, but also considering the environmental impact from the beginning of the planning.

Challenges in Application of Green Supply Chain

Indonesian regulatory framework related to the green supply chain in construction is still not composed in full and integrated. Although the government has issued various rules regarding green development, its implementation in the field is not uniform and often overlaps. The lack of coordination between the central and regional governments complicates the application of this policy.

The difference between standards between regions also confuses industry players. A contractor who wants to adopt GSCM is often faced with complicated bureaucracy and non -uniform provisions, thus breaking enthusiasm to innovate in a greener direction.

The problem of funding is one of the biggest obstacles in the application of green practice in the construction sector. Behind the high initial cost for the adoption of technology and environmentally friendly materials, there are deeper structural challenges. For example, the price of low carbon cement and recycled steel can be 15-30% more expensive than conventional materials.

In a very competitive industrial climate with a thin profit margin, this difference in cost is a significant obstacle. With industrial value projected to reach USD 407.87 billion in 2029, the need for green financing is increasingly important to support this transformation.

As an archipelagic country, the distribution of environmentally friendly materials to remote areas becomes inefficient due to the lack of logistics infrastructure. Small ports in Eastern Indonesia, for example, do not yet have facilities to handle environmentally friendly building materials that require special treatment.

In terms of technology, the application of Building Information Modeling (BIM) which is proven to be effective in reducing new construction waste was adopted by less than one -fifth large company. Technology such as prefabrication is also not widely used because it is considered expensive and complex by industry players.

Changing the work culture in the Indonesian construction industry is like changing the direction of large ships in the middle of the ocean - the process is slow and full of challenges. Working culture that prioritizes cost and speed efficiency still dominates, especially among small and medium contractors.

Most field workers, including project supervisors and tool operators, do not yet understand the benefits of sustainable practice. They are used to the old methods that only focus on short -term results, without considering long -term environmental impacts.

Innovative Solutions - Strategies to Realize Green Supply Chain

The Indonesian government needs to design a comprehensive and synchronous policy to encourage the systematic application of green supply chain. With an infrastructure budget of IDR 423 trillion in 2024, the government has a strategic position to set sustainability standards in each construction project.

We need an incentive scheme and sanctions that are designed carefully. Companies that implement environmentally friendly practices can obtain profits such as tax relief, ease of licensing, and priorities in government tender. Meanwhile, companies that have not yet adopted the principle of sustainability can be subject to carbon tax or fines for environmental damage.

Transformation to the sustainable supply chain requires evolution in the financial sector. The use of environmentally friendly technology in construction and operations of buildings is projected to reduce carbon emissions in this sector by 20% in 2035, and create investment potentials up to USD 3 trillion for developing countries.

National banks can design special financing products with light interest rates for green technology investment. Green bond scheme (green bond) to fund sustainable construction projects is also an attractive option for large companies, especially given the market projection that will reach USD 438.56 billion in 2030 with an annual growth of 7.5%.

Indonesia needs to create an integrated green technology ecosystem from upstream to downstream. This includes the development of local -based environmentally friendly materials, such as geopolymer cement from PLTU flying ash or recycled aggregate from construction waste. The planned implementation of 15 carbon capture and storage projects (CCUS), eight of which is targeted to be active in 2026-2035, can help reduce 8.6 million tons of carbon emissions in 2031.

The establishment of a construction material recovery facility in various regions will help reduce the volume of waste while producing new raw materials. Innovative construction technology such as 3D Printing also needs to be developed to minimize waste and increase efficiency.

The application of Green Supply Chain requires human resources who understand, are trained, and care for sustainability. The government and industry can develop a green construction certification program for all levels, ranging from field technicians to project managers. The Civil Engineering and Architecture Education Curriculum must also be renewed to include sustainable construction materials as a whole.

Routine training and practical workshops that present international practitioners can help accelerate the transfer of knowledge. In addition, the internship and labor exchange program to green companies abroad will provide real insights to Indonesian workers about the best practices in the sustainable industry.

Opportunities and Future of Sustainable Construction Industry

Support for Green Supply Chain in national construction is even greater. The output growth projection of this sector reached IDR 2,775.2 trillion in 2028, with an average annual growth rate of 5.7% from 2024-2028. This figure confirms that the construction sector has great potential to move towards sustainability.

Indonesia's commitment to achieve a net zero emission (net zero emission) in 2060, as well as participation in global agreements such as the Paris Agreement, strengthening the encouragement for change. Public awareness of increasingly high environmental issues, plus government policy support, will continue to encourage the growth of the green building market in the country.

Digital technology such as blockchain can also be used to track and verify the origin of environmentally friendly materials in the supply chain. This can provide more transparency and trust to investors and consumers who are increasingly concerned about sustainability.

The application of Green Supply Chain not only produces ecological benefits, but also provides real economic benefits. The EDGE certification program, for example, has helped reduce carbon emissions by 67,000 tons per year. If converted to economic value with a carbon price of USD 20 per ton, the figure is equivalent to savings of around USD 1.34 million every year.

In addition, green buildings are able to save energy up to 20-30% compared to conventional buildings. With the people of Indonesia, especially low -income groups, allocates about 20% of the Bylaws for electricity costs, this savings can have a significant financial impact at the final consumer level.

Arranging Future Construction Foundation

Transformation towards Green Supply Chain in the Indonesian Construction Industry is no longer an option, but a necessity to ensure the sustainability of national development. With the estimated market value reaching USD 535.98 billion in 2030 and green investment potential of USD 3 trillion, the opportunity to make structural changes is very wide open.

Indeed, the challenges faced are very diverse and complex - ranging from aspects of regulation, financing, technology, to the mindset of industrial players. However, a comprehensive approach and strong commitment from all related parties can change this obstacle into an opportunity to develop a more resilient, efficient, and environmentally friendly construction sector.

The success of the future of this industry will be very dependent on the extent to which it is able to adapt to the demands of the times. Companies that are able to apply the principle of sustainability consistently will have a competitive advantage and become a pioneer in the growing green economy era.

As the saying goes "No ivory is not cracked", the journey to this transformation will certainly not be free from obstacles. However, with a joint determination and strong cross -sectoral collaboration, the Indonesian construction industry has a great opportunity to be a role model for other developing countries in adopting effective and sustainable green supply chain. The foundation built today will be a valuable legacy for future generations.

The author is a member of the Communication and Social Media Implementing Board of PII Central Management for 2024-2027

Cikarang, May 31, 2025