Jakarta – In a significant move strengthening ties between Southeast Asia and the Gulf, Abu Dhabi and Qatar have pledged to fund a large-scale housing initiative in Indonesia, aimed at addressing the country’s massive housing deficit. The ambitious project, part of Indonesia’s broader infrastructure push, is expected to produce 15 million homes over the next five years, with substantial financial backing from the Gulf nations.
Hashim Djojohadikusumo, head of Indonesia’s housing task force, confirmed that Qatar would finance the construction of five million houses. An additional one million homes will be funded by an unnamed Qatari philanthropist, highlighting the growing role of private philanthropy in global development initiatives. Meanwhile, Abu Dhabi has committed to building one million houses in Indonesia as part of a larger strategic cooperation between the two regions.
A Bold Housing Plan Under New Leadership
The housing initiative comes at a time of political change in Indonesia. In October 2024, Prabowo Subianto, a retired general, was elected the eighth president of Indonesia. Subianto has made housing a cornerstone of his first-term agenda, pledging to build 15 million homes in the country’s first five years of his presidency. The project aims to address Indonesia’s severe housing shortage, with millions of Indonesians living in substandard or overcrowded conditions.
Indonesia, the world’s largest archipelago, faces a unique set of challenges in housing development. Its dense urban areas are rapidly expanding, while rural regions remain underdeveloped. With a population of over 270 million people, the country requires millions of new homes to accommodate the growing population, a task that the government has struggled to tackle without substantial foreign investment.
The partnership with Abu Dhabi and Qatar marks a strategic move for Indonesia, providing not only the financial resources but also international expertise in construction and urban development. The commitment from the Gulf states is expected to accelerate the project’s timeline and bring much-needed capital to the Indonesian economy.
Gulf Investment in Indonesia Grows
The decision by Abu Dhabi and Qatar to support Indonesia’s housing project is part of a broader trend of increased Gulf investment in Southeast Asia. In 2022, trade between Indonesia and the six Gulf Cooperation Council (GCC) countries—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE—totaled $16 billion. Investment from the GCC into Indonesia reached $25 million, with the bulk of it coming from Saudi Arabia, Kuwait, and the UAE, according to the Indonesian Ministry of Foreign Affairs.
The Gulf region has been actively seeking to diversify its investments beyond oil and gas, and Indonesia’s rapidly growing economy presents a promising opportunity. As Southeast Asia’s largest economy, Indonesia has become an attractive destination for Gulf investors looking for opportunities in infrastructure, energy, and consumer markets. In addition to the housing project, several Gulf nations are also involved in financing Indonesian infrastructure projects, including transportation and energy.
Indonesia’s government has also been proactive in courting foreign investments, particularly from the GCC. In September 2024, the six GCC nations formally opened negotiations with Indonesia over a free trade agreement (FTA), which is expected to further deepen economic relations between the two regions. The agreement will likely reduce trade barriers, facilitate investments, and enhance cooperation in sectors such as construction, real estate, and energy.
Economic and Social Implications
The collaboration with the Gulf states is expected to have wide-reaching economic and social implications for Indonesia. The housing project will not only alleviate the country’s housing shortage but also create thousands of jobs, stimulate local economies, and foster skills development in construction and urban planning. The project is expected to contribute significantly to Indonesia’s economic growth, which has been forecast to remain robust at 6.5% in 2024, despite global uncertainties.
For the Gulf states, the housing project offers an opportunity to strengthen diplomatic and economic ties with Indonesia, one of the largest economies in the region. Both Abu Dhabi and Qatar have increasingly looked to diversify their investment portfolios in the face of declining oil revenues and growing competition for global capital. The housing initiative is seen as a win-win for both sides—Indonesia benefits from much-needed infrastructure, while the Gulf states gain access to one of Southeast Asia’s most promising markets.
Moreover, this partnership could pave the way for further investments in Indonesia, especially in sectors aligned with the Gulf’s long-term diversification strategies. From renewable energy to advanced manufacturing and technology, the Gulf’s economic future is tied to a broader global investment strategy. Indonesia, with its large consumer base and strategic location in Asia, is a natural partner in this diversification effort.