Industry Insights
Nusantara: Opportunities for Interior Suppliers
A New Capital City Means a New Market for Interior Materials
Indonesia is building a new capital. Nusantara — officially designated as Ibu Kota Nusantara (IKN) — is taking shape in East Kalimantan, on the island of Borneo, roughly 2,000 kilometres from Jakarta. The project is one of the largest planned city developments in the world, and its scale represents a generational opportunity for every sector of the built environment supply chain, including interior materials.
The Indonesian government’s ambition for Nusantara goes beyond simply relocating administrative functions from Jakarta. The vision, as articulated by the Otorita IKN (the authority managing the capital’s development), is for a sustainable, technology-enabled city that serves as a model for Indonesian urban development. The target population is 1.9 million by 2045, with an initial phase focused on government buildings, core infrastructure, and the essential residential and commercial facilities to support the first wave of civil servants and their families.
For interior material suppliers — flooring, wallcovering, fabric, and related finishes — Nusantara is simultaneously an enormous opportunity and a complex operational challenge. Having operated in Indonesia for decades through Goodrich Indonesia, we have been following the IKN development closely and engaging with the project ecosystem. What follows is our assessment of the opportunity, the challenges, and what suppliers need to understand to participate meaningfully.
The Scale of the Interior Materials Opportunity
The numbers associated with Nusantara are substantial. The initial development phase includes the Presidential Palace, ministerial buildings, a parliamentary complex, government housing, commercial centres, educational facilities, healthcare infrastructure, and hospitality developments. Each of these building types requires interior finishes, and the aggregate demand across the initial phase alone represents a significant volume of flooring, wallcovering, and related materials.
Government and Institutional Buildings
The core government precinct — the Presidential Palace, ministries, and parliamentary complex — is being designed to international standards, with sustainability and Indonesian cultural identity as central design themes. These buildings require high-specification interior finishes: durable commercial flooring for high-traffic public areas, acoustic solutions for legislative chambers and meeting rooms, wallcoverings and fabrics for executive and ceremonial spaces, and functional flooring for back-of-house and administrative areas.
Government building procurement in Indonesia follows regulated processes, with specifications typically developed by appointed architects and approved through the relevant government agencies. Suppliers seeking to participate need to ensure their products meet Indonesian standards (SNI), hold appropriate certifications, and are available through compliant procurement channels. The specifications for IKN government buildings are expected to reflect the sustainability ambitions of the project, meaning that environmental certifications and green building credentials will carry significant weight.
Residential Development
The planned relocation of tens of thousands of civil servants and their families to Nusantara requires large-scale residential construction. Both government-provided housing and private residential developments are part of the plan, ranging from apartment complexes to landed housing. The residential segment will generate demand for flooring — primarily vinyl flooring and engineered timber in mid- to upper-range developments — as well as wallcovering and window treatment fabrics for higher-specification units.
The volume potential of the residential segment is significant, but the price sensitivity is also high. Government housing procurement typically favours cost-effective solutions, and the residential market in a new city will take time to develop the premium segment that supports higher-value interior finishes. Suppliers should expect the initial residential demand to be concentrated in the mid-market, with premium demand growing as the city matures and private-sector residential development accelerates.
Commercial and Hospitality
A functioning capital city requires commercial infrastructure: offices for businesses that serve the government sector, retail centres, hotels and serviced apartments for visitors and officials, restaurants and entertainment venues, and healthcare facilities. The Otorita IKN has been actively seeking private-sector investment in commercial and hospitality development, and several major Indonesian and international developers have announced projects or signed memoranda of understanding.
The hospitality segment, in particular, presents a clear opportunity for interior material suppliers. Hotels being developed in Nusantara will need the full range of interior finishes — carpet for corridors and guest rooms, LVT for public areas and F&B outlets, wallcoverings for lobbies and feature areas, and upholstery fabrics for furniture programmes. The design standard for these properties will be set by the hotel operators (both domestic chains and international brands), and the material specifications will follow their established quality requirements.
Educational and Healthcare Facilities
Schools, universities, hospitals, and clinics are essential components of the IKN masterplan. These institutional buildings have specific interior material requirements — healthcare facilities need the hygienic, chemical-resistant flooring discussed elsewhere in our Industry Insights series, while educational facilities require durable, acoustically appropriate flooring and wall finishes that can withstand intensive use by students.
Indonesia’s Building Standards and Sustainability Ambitions for IKN
The Indonesian government has positioned Nusantara as a showcase for sustainable urban development. The IKN masterplan targets a forest city concept, with extensive green space, renewable energy infrastructure, and buildings designed to meet high sustainability standards. This sustainability ambition directly affects interior material specification.
Green Building Requirements
Buildings in Nusantara are expected to achieve certification under Indonesia’s green building rating system, Greenship, administered by the Green Building Council Indonesia (GBCI). Greenship includes credits for interior materials that have low VOC emissions, recycled content, responsibly sourced raw materials, and third-party environmental certifications. Interior material suppliers who can provide Environmental Product Declarations (EPDs), health product declarations, and recognised certifications such as FloorScore or Greenguard will have a competitive advantage in the IKN procurement process.
Beyond Greenship, there are indications that some IKN projects — particularly those with international investment or international hotel brand involvement — may pursue LEED or WELL certification. Suppliers who are familiar with the material documentation requirements of these international rating systems will be better positioned to support specification teams working to these standards.
Local Content Requirements
Indonesia’s Tingkat Komponen Dalam Negeri (TKDN) regulations — which mandate minimum levels of local content in government-procured goods and services — apply to IKN construction. For interior materials, this means that products manufactured in Indonesia or with significant Indonesian content receive preference in government procurement. The TKDN threshold varies by product category, but the general direction of policy is clear: the Indonesian government wants IKN construction to support domestic industry.
For international interior material suppliers, this creates both a constraint and an incentive. Suppliers who manufacture in Indonesia, source Indonesian raw materials, or have established Indonesian operations can meet TKDN requirements and access government procurement opportunities. Suppliers who rely entirely on imported products may find themselves at a disadvantage for government building projects, though the private-sector commercial and hospitality segments are less constrained by TKDN considerations.
Challenges for Interior Material Suppliers
The Nusantara opportunity comes with significant practical challenges that suppliers must plan for.
Logistics and Delivery
East Kalimantan is not Jakarta. The logistics infrastructure — port capacity, road networks, warehousing — is still being developed, and delivering materials to the IKN site involves longer and more complex supply chains than delivering to projects in Java. Maritime shipping from Singapore or Jakarta to Balikpapan (the nearest major port to the IKN site) adds time and cost to the supply chain. Inland logistics from Balikpapan to the IKN site itself require road transport through infrastructure that is still being upgraded.
For interior materials, which require climate-controlled storage and careful handling, the logistics challenge is not trivial. Wallcoverings, vinyl flooring, and fabrics are sensitive to heat and humidity during transit and storage, and the tropical conditions of East Kalimantan — high temperatures, high humidity, and seasonal heavy rainfall — demand proper warehousing at the destination end. Suppliers who can establish local stockholding or staging facilities near the IKN site will have a significant delivery advantage over those shipping on a project-by-project basis.
Construction Timeline Uncertainty
Large-scale national capital projects inevitably experience timeline adjustments. The IKN development has already seen revisions to its phasing and delivery schedule, and further adjustments are likely as the project progresses. For interior material suppliers, this uncertainty affects inventory planning, resource allocation, and the timing of market entry investments. Suppliers need to balance early engagement — which builds relationships and positions them for specification inclusion — with prudent management of the financial exposure that comes from committing resources to a project with a fluid timeline.
Payment and Financing
Government construction projects in Indonesia can involve extended payment terms, and the IKN project includes a mix of government-funded and privately financed developments with different payment structures. Suppliers, particularly those accustomed to the more predictable payment cycles of Singapore or Malaysia, need to assess the credit risk and cash flow implications of IKN projects carefully. Working through established Indonesian contractors and distributors who understand the local payment landscape can mitigate some of this risk.
Competition from Local and Regional Suppliers
The scale of the IKN opportunity is attracting attention from interior material suppliers across Asia. Chinese manufacturers, in particular, are aggressively competing for flooring and wallcovering supply contracts, often at price points that are difficult for Singapore- or Southeast Asian-based suppliers to match on a purely cost basis. Competing on price alone is not a viable strategy; suppliers need to differentiate on quality, consistency, technical support, sustainability credentials, and the ability to provide a comprehensive material solution rather than individual commodity products.
How Goodrich Indonesia Is Positioned
Goodrich has operated in Indonesia for decades, with an established presence that includes local distribution, technical support, and project experience across the Indonesian market. This existing infrastructure provides a foundation for serving the IKN opportunity that a new market entrant would take years to develop.
Our positioning for Nusantara rests on several factors. First, our product range spans flooring, wallcovering, carpet, and fabric — allowing us to serve the full interior material requirement of a building project from a single source. Second, our regional supply chain, with access to product sourcing across multiple manufacturing origins, provides flexibility to meet both quality specifications and cost targets. Third, our understanding of Indonesian building standards, procurement processes, and business practices — developed over years of operating in the market — reduces the friction that international suppliers often encounter when entering Indonesian government-adjacent projects.
We are engaging with the IKN project ecosystem through multiple channels: direct engagement with architects and design consultants working on IKN buildings, relationships with contractors bidding on IKN construction packages, and participation in industry forums and exhibitions where IKN procurement requirements are discussed. Our approach is practical — we focus on projects that are moving towards procurement decisions rather than speculating on developments that remain in the planning phase.
What Suppliers Should Do Now
For interior material suppliers considering the Nusantara opportunity, the following actions are practical starting points.
Assess your Indonesian market readiness. Do you have an Indonesian entity or a local partner? Can you meet TKDN requirements? Do your products hold SNI certification where required? If the answers are no, address these prerequisites before investing in IKN-specific business development.
Understand the project pipeline in detail. Not all IKN buildings are at the same stage of development. Some are under construction, some are in detailed design, and some remain at the masterplan stage. Focus your efforts on projects that are approaching or have entered the specification and procurement phases.
Prepare your sustainability credentials. IKN projects will scrutinise environmental certifications, EPDs, and green building contributions more closely than typical Indonesian construction projects. Ensure your product documentation is complete and current.
Plan your logistics. Delivery to East Kalimantan is a genuine logistical undertaking. Understand the shipping routes, transit times, and local warehousing options before committing to delivery schedules. Build realistic lead times into your proposals.
Build local relationships. IKN procurement decisions are influenced by architects, consultants, contractors, and government officials who are primarily based in Jakarta but increasingly present in Nusantara. Investing in relationships with these stakeholders is essential for any supplier serious about the IKN market.
Nusantara is a once-in-a-generation project. For interior material suppliers with the right positioning, the right products, and the operational readiness to serve a complex, large-scale development in a developing location, it represents a defining market opportunity in Southeast Asia’s built environment sector.
