Indonesia Crawler Excavator Market - Strategic Assessment & Forecast 2024-2029

INDUSTRY OVERVIEW

The Indonesia crawler excavator market by volume was valued at 13,625 units in 2023 and is expected to reach 16,495 units in 2029, growing at a CAGR of 3.24% during the forecast period. Between 2021 and 2024, the Indonesian government plans to invest USD 430 billion in infrastructure development projects. Investments in infrastructure increased by 20% between 2015 and 2020 compared to the previous investment plan. The government investment increase in the construction & mining industries is expected to drive the Indonesia crawler excavator market during the projected period.

Increased Investment in Public Infrastructure Projects

1. According to the Indonesian Association of Heavy Equipment Manufacturers (HINABI), 40% of all production is utilized in the mining industry. After the pandemic in 2023, industrial activity increased, driving up demand for coal, tin, and nickel. The increase in industrial activity is projected to support the growth of the Indonesia crawler excavator market.
2. Most of the nation's infrastructure development initiatives are in the transportation industry. Road, rail, and port development are the three sectors that comprise 29%, 22%, and 23% of investment projects, respectively.
3. This shift is aided by government financing, increasing demand for new solar field projects. The Inflation Reduction Act has had some impact on the private sector's USD 133 billion commitment to renewable energy, as the White House noted.
4. The Indonesian government wants to be carbon neutral by 2060. To this end, it emphasizes using renewable energy sources, such as encouraging the use of electric cars in the transportation sector, lowering the usage of fossil fuels, and installing solar panels on buildings.

KEY HIGHLIGHTS

1. The large crawler excavator segment accounted for the largest market share of the Indonesia crawler excavator market in 2023. Growing investment in mining and public infrastructure projects drives demand for these machines in the Indonesian market.
2. Crawler excavator utilization by the mining industry as an end-user has the largest Indonesia crawler excavator market share in 2023. Also, the market for large and medium excavators in the Indonesia crawler excavator market is strong due to their extensive uses in the mining industry.
3. The Indonesian crawler excavator market was dominated by large excavators in 2023. However, the sales of crawler excavators are expected to decline in 2024 due to a reduction in investment in public infrastructure projects due to the upcoming presidential election.
4. The weakening of the Indonesian local currency rupiah is expected to further impact heavy equipment sales, including excavators, in the Indonesia crawler excavator market in 2024. The currency's wakening will also impact the increasing cost of excavators, as Indonesia majorly depends on imports. 
5. Indonesia prioritizes infrastructure in its National Medium-term Development Plan 2020-2024, allocating a significant USD 359.2 billion investment.
6. Some major distributors of construction equipment include excavators in the Indonesian market.United Tractors accounts for the largest market share in Indonesia.
7. PT Hexindo Adiperkasa
8. Intraco Penta
9. Traktor Nusantara has a market share of around XX%.
10. The OEMs in Indonesia are adopting electric and hydrogen fuel technology.Komatsu develops hydrogen fuel cell excavators with Toyota systems for Southeast Asian markets, including Indonesia.
11. Volvo launched the ECR25 electric compact excavator, L25 electric compact wheel loader, and EC55 electric mini excavator.
12. Komatsu also launched HB365-1 hybrid excavators in the Indonesian market in 2023.
13. In June 2021, Hitachi Construction Machinery addressed cost and turnaround challenges by establishing a parts remanufacturing plant in Indonesia. This facility eliminates transporting large and medium-sized hydraulic excavators to Japan for remanufacturing.
14. China invests heavily in various infrastructure development projects in the Indonesia crawler excavator market. For instance, over 500 units of SANY equipment are used to construct high-speed railway projects between Jakarta and the City of Bandung.

MARKET TRENDS & DRIVERS

Application of Mini Excavators in Palm Oil Plantations

1. Demand for heavy equipment has increased in agribusiness, particularly palm oil plantations, as Crude Palm Oil (CPO) experiences growing demand in domestic and international markets.
2. Indonesia and Malaysia are the world’s largest producers of palm oil, accounting for more than 85% of the world’s total production. Oil palm plantations span 26 provinces.
3. Indonesian palm oil is increasingly used within the country, and it is estimated that Indonesia’s population will reach 285 million by 2025, further driving domestic demand.
4. Henceforth, boosting farmers’ competitiveness by exposing them to good machinery and practices is key to increasing agricultural productivity and building a sustainable palm oil production system in Indonesia.

Adoption of the Electric & Hydrogen Fuel Technologies

Concerns over environmental issues led the Indonesian government to aim for carbon neutrality by 2060, which triggered the need for electric construction machinery. The increasing government focus on carbon emissions reductions in 2021 further supported the demand for electric construction equipment. Major construction manufacturers in the Indonesia crawler excavator market, such as Volvo Construction Equipment, SDLG, and XCMG, launched electric and compact mini excavators in Indonesia to tackle the growing market demand. In 2021, Volvo Construction Equipment launched the EC55D compact excavators in Indonesia for smart city projects.

Government Investments in Public Infrastructure Projects Through the PPP Model

In 2023, the government invested in 83 PPP projects for infrastructure development, which included 50 projects in the transportation sector, including 13 ports and 15 railways projects. Asian Development Bank provided a loan of USD 100 million to the Indonesian government to support these projects. In 2023, the Indonesian government planned 49 projects, 33 Public Private Partnership Projects (PPP), and 16 non-PPP projects. These 33 PPP projects include 18 in the road sector, 4 in the telecommunication sector, 1 in the electricity sector, 6 in the water supply sector, 3 in the transportation sector, and 1 in the energy conservation sector.

Rise in Mining Projects Will Drive the Indonesia Crawler Excavator Market

1. The mining industry was one of the major contributors to the Indonesian GDP in 2022, accounting for a share of nearly 5%. According to a report by the Central Statistics Agency (BPS), the mining industry witnessed a sharp growth in 2022, and the industry’s mineral export value reached USD 5.93 billion, up 103% from 2021.
2. In 2023, the iron ore industry recorded the highest growth of 25.78% among the mining and quarrying subsectors. The other mining subsectors grew by 4.79%, and the lignite coal subsectors grew by 3.64%.
3. In 2023, the mining industry in Indonesia attracted more than USD 16 billion in FDI investments. For 2023, the government expects USD 92 billion in foreign investments and USD 108 billion in domestic investments.

INDUSTRY RESTRAINTS

Surge in Building Material Prices Hampers Construction Projects

1. In 2023, the government of Indonesia increased fuel and oil prices. The increase in fuel prices is expected to affect other commodities, including housing and property sectors. The rise in fuel prices will affect building materials such as iron, cement, sand, steel, and bricks.
2. According to the Central Statistics Agency (BPS), in 2023 diesel prices increased by 37.8%, cement rose by 8.5%, asphalt increased by 15.3%, and steel roof prices fell by 3.85%.
3. The cost of construction projects of buildings for roads, bridges, and ports increased by 9.6%; the cost of installations of electricity, gas, water, and communication centers rose by 5.6%.

Skilled Labor Shortage Hampering the Industry’s Growth

1. In 2023, Indonesia faced a shortage of skilled labor. The country needs ~113 million skilled workers by 2030 to achieve economic growth in the manufacturing, infrastructure, and agribusiness sectors.
2. The country depends on foreign labor from Bangladesh, Nepal, and India. The shortage of skilled labor triggered by lockdowns during COVID-19 in 2020 further impacted the Indonesian labor market. 
3. In 2022, Indonesia had the lowest rate of foreign participation in the labor market among Southeast Asian countries. Indonesia has a 0.7% participation in foreign labor, whereas participation in foreign labor was higher in Malaysia (13%) and Singapore (35%).

VENDOR LANDSCAPE

1. Caterpillar, Kobelco, SANY, Hitachi Construction Machinery, and Komatsu are leaders in the Indonesia crawler excavator market. These companies have a strong market share and offer diverse sets of equipment.
2. Kubota, Liu Gong, Yanmar, and JCB are niche players in the Indonesia crawler excavator market. These companies offer low product diversification and have a strong presence in the Indonesian local market.
3. Volvo Construction Equipment, Zoomlion, Takeuchi, Hyundai Construction Equipment, and XCMG are emerging in the Indonesia crawler excavator market. These companies are introducing new technologically advanced products to challenge the market share of market leaders in the country’s market.