This week, Maruarar Sirait, Indonesia’s housing minister, spent four hours at the Jakarta residence of China’s ambassador, Wang Lutong, and emerged with the outline of an ambitious plan.
China will help Indonesia build large numbers of apartment blocks, known locally as rusun, by investing capital, sharing construction expertise and partnering with Indonesian firms to get the job done.
Why does Indonesia need the help? The country faces an acute housing shortage: government data show that 9.29 million families — about 12% of all households — lack adequate housing. Construction also drives large-scale employment, since homebuilding supports 183 other industries, from cement to furniture-making.
The two governments have formed a joint team drawn from Indonesia’s housing ministry, the state housing fund Tapera and China’s Ministry of Housing. Its mandate is to determine which land to use, which regulations to follow and which building technology to import.
That last question reportedly remains unresolved, with officials on both sides saying only that any technology must “fit Indonesia’s conditions,” including safety, land and environmental rules.
That open question carries weight. China builds two very different things. On one hand, it manufactures more solar panels, batteries, heat pumps, and electric vehicles than any other country.
On the other, it also erects vast numbers of ordinary concrete buildings that consume enormous energy and generate heavy pollution. Which version of China’s building technology comes to Indonesia will depend on what gets written into this deal—not on chance.
Indonesia has been here before, in a different sector. Its nickel-mining and battery-material industry grew rapidly on the back of Chinese investment, but much of it runs on coal plants built specifically to power those factories. That choice locked in decades of coal use to support a supposedly clean industry: electric-vehicle batteries.
Buildings last even longer than factories. If millions of new homes are built the old way — reliant on heavy concrete and tethered to a coal-powered grid — Indonesia will be locked into that choice for 30 to 50 years, since homes are neither easy nor cheap to retrofit once standing.
There is a simple way to avoid repeating that mistake. As the two governments draft the rules for this housing program, Indonesia should insist on a full package of clean technology that China already produces at scale.
Solar panels should be built into every rooftop from the start, rather than retrofitted later, especially since Indonesia scaled back its rules for selling surplus solar power back to the grid in 2024, and the state power company has been slow to embrace residential solar.
Batteries should be included, too, so that elevators, water pumps and lights keep running during the power cuts still common in many parts of the country. Heat pumps or efficient air conditioners matter too, since cooling accounts for a large share of Indonesia’s electricity use, and better equipment can cut that consumption significantly.
Cleaner cement should replace the conventional kind: standard cement production accounts for a substantial share of the world’s pollution, and China has developed lower-emission methods of making it.
Parking areas should include space and electrical outlets for charging electric motorbikes and cars, built in from day one rather than added years later at greater cost. And new buildings should use water-saving, energy-efficient appliances, which lower both electricity bills and strain on the power grid.
China has good reason to agree to all this. Its factories now produce far more solar panels, batteries, and electric vehicles than domestic buyers can absorb, and prices at home have fallen sharply as a result.
Chinese companies are known to be actively hunting for buyers abroad. A guaranteed, government-backed housing program in Indonesia — one of Southeast Asia’s largest markets — is a good deal for them as well. In other words, Indonesia is not simply asking for a favor; it has real leverage to negotiate.
None of this needs to delay the project’s progress. The land surveys and rule-making already underway can incorporate these energy requirements from the outset, since they are details that can be written into the same contracts and building codes the two housing ministries are drafting this month.
Indonesia asked China for money, jobs and technology. It should make sure the technology it receives is the clean kind China is producing at scale and most eager to sell.
Muhammad Zulfikar Rakhmat is director of the China-Indonesia Desk at the Jakarta-based Center of Economic and Law Studies (CELIOS) independent research institute. Yeta Purnama is a researcher at CELIOS.
