Indonesia’s Flagship Housing Drive: A Catalyst for the Paints & Coatings Market

What is Indonesia’s Flagship Housing Program?

The Indonesia Housing Program encompasses a range of government-led initiatives aimed at expanding access to affordable, decent, and adequate housing, particularly for low- and middle-income households. These initiatives form a core part of the government’s broader social welfare and infrastructure development agenda.

At the centre of this effort is the Housing Financing Liquidity Facility (FLPP), Indonesia's flagship affordable housing financing scheme. Launched in 2010 under the administration of former President Susilo Bambang Yudhoyono, the program was designed to improve homeownership access for low-income households by providing subsidised mortgage financing, thereby significantly reducing the financial barriers to purchasing a home.

The One Million Housing Program launched under President Joko Widodo laid the groundwork for Indonesia’s current housing policy framework. Building on this foundation, the Three Million Homes Program, introduced in 2024 under President Prabowo Subianto, represents a significant expansion of the government’s housing agenda and has been positioned as a flagship national initiative. The program seeks to address Indonesia’s longstanding housing backlog and improve living standards for low-income households by targeting the construction of three million housing units annually, comprising one million in urban areas and two million in rural regions. In this context, the Three Million Homes Program defines the country’s overarching housing ambition, while the FLPP scheme functions as the primary financial mechanism enabling its execution.

A Strong Catalyst for Paints & Coatings Industry

Growth in housing construction under the government's housing programs has had a positive impact on the coatings industry, particularly architectural paints and coatings. Between 2015 and 2019, Indonesia recorded a steady rise in residential construction activity. Although the construction sector faced a slowdown in 2020 due to the pandemic, growth resumed in the following years.

In 2024, demand for architectural coatings in the residential new-build segment increased significantly, supported by higher completion rates of new housing projects. Under the One Million Housing Program, the government had constructed approximately 9.2 million houses by 2023, with an additional 1 million units planned for 2024—bringing the total to nearly 10 million over a decade.

According to the latest data, around 0.66 million houses were completed by August 2024, providing a strong boost to Indonesia’s housing market by helping to reduce the housing deficit. On the demand side, sales of landed houses increased notably, particularly in the mid-priced housing segment, further supporting growth in architectural coatings consumption.

The one million housing programme was further modified and extended after the completion of its 10th year of development. The new programme is known as the Three Million Housing Programme, which aims to build three million houses in both the rural and urban areas within the 2025-2029 period. A cumulative budget of approximately USD 312 million has been allocated for housing in 2025, which would support the ambitious plans for the nation. The figure indicates a healthy investment environment, which would ultimately lead to the growth of the housing construction industry and further accelerate the demand for architectural coatings.

According to the Indonesian Coatings Association, the country’s coatings industry is currently experiencing healthy growth. As of October 2024, Indonesia’s total coatings production capacity reached approximately 1 million tonnes. Water-based decorative coatings accounted for the largest share at around 67%, followed by solvent-based decorative coatings (8%), wood coatings (7%), marine and offshore protective coatings (6%), coil coatings (4%) and others. Paint production in Indonesia was expected to exceed 1 million tonnes in 2024, closely aligning with overall market demand.

Growth in Paint Manufacturing

To address rising demand, domestic paint manufacturers have expanded their production capacities by investing in new manufacturing facilities and upgrading existing plants. These capacity expansions have strengthened supply capabilities, improved operational efficiency, and supported higher output levels. In addition to boosting production, these investments have also created employment opportunities, contributing positively to overall economic growth.

Green Initiatives

Indonesia is increasingly prioritising sustainable industrial development through policies focused on lowering carbon emissions, encouraging environmentally responsible manufacturing, and advancing green building practices. These initiatives are reshaping demand across key end-use sectors such as construction, where the market is steadily shifting toward low-VOC, water-based, and environmentally compliant products. For instance, PT Mataram Paint exemplifies this industry transition by expanding its portfolio of low-VOC and water-based paint solutions in line with Indonesia’s environmental regulations.

Positive Market Outlook

Continued government emphasis on strategic infrastructure priorities, particularly construction and housing development, is expected to support long-term growth in the architectural coatings segment. At the same time, tightening environmental regulations are accelerating the industry’s shift toward sustainable solutions, with water-based and low-volatile organic compound (VOC) coatings expected to gain wider market acceptance in the coming years.

Conclusion

Indonesia’s flagship housing programs have driven a strong demand for paints and coatings, supporting industry growth while strengthening the construction materials sector. Sustained emphasis on quality, sustainability, and supply chain resilience will be key to maintaining these benefits going forward.