Industrial gases are essential for various industrial processes and applications, such as welding, cutting, heating, cooling, purifying, and preserving. They include oxygen, nitrogen, argon, carbon dioxide, hydrogen, helium, and specialty gases. The Indonesia industrial gases market size attained a value of nearly USD 7.30 billion in 2023. The market is further estimated to grow in the forecast period of 2024-2032 at a CAGR of 5.1% to reach about USD 9.87 billion by 2032. What are the key drivers of growth in this sector? In this blog post, we will explore the major factors that are contributing to the expansion of the industrial gases market in Indonesia.
Economic Growth and Industrial Development
Indonesia is one of the fastest-growing economies in Southeast Asia, with a GDP growth rate of 5.02% in 2019. The country has a large and diverse industrial sector, which accounts for about 20% of the GDP. Some of the key industrial sectors in Indonesia are oil and gas, mining, metal, chemical, food and beverage, textile, and automotive. These sectors require a steady supply of industrial gases for various purposes, such as enhancing combustion, refining metals, preserving food, and improving product quality. As the economy and the industrial sector grow, the demand for industrial gases also increases. According to a report by IMARC Group, the oil and gas sector is the largest consumer of industrial gases in Indonesia, followed by the metal sector. The report also projects that the demand for industrial gases will grow at a CAGR of 4.8% during 2024-2032.
Infrastructure Development
Infrastructure is another key driver of growth for the industrial gases market in Indonesia. The country has been investing heavily in infrastructure projects, such as roads, bridges, railways, airports, ports, power plants, and water supply systems. These projects require a large amount of industrial gases, such as oxygen, nitrogen, and argon, for welding, cutting, and fabrication of metal structures. Industrial gases are also used for testing and inspection of pipelines, tanks, and vessels. Moreover, industrial gases play a vital role in the operation and maintenance of infrastructure facilities, such as power generation, water treatment, and waste management. According to the World Bank, Indonesia's infrastructure spending reached 6.1% of GDP in 2019, and the government plans to spend USD 412 billion on infrastructure development by 2024.
Manufacturing and Industrial Production
Manufacturing is another important sector that drives the demand for industrial gases in Indonesia. The country has a strong manufacturing base, especially in the fields of electronics, machinery, automotive, and consumer goods. These industries use industrial gases for various processes, such as soldering, brazing, annealing, hardening, coating, and cleaning. Industrial gases also help to improve the quality, performance, and safety of the products. Additionally, industrial gases contribute to enhancing the productivity and efficiency of the manufacturing processes, by reducing energy consumption, waste generation, and downtime. According to the Indonesia Investment Coordinating Board, the manufacturing sector grew by 4.17% in 2019, and the government aims to increase its contribution to GDP from 20% to 25% by 2030.
Environmental Regulations and Sustainability Initiatives
Environmental regulations and sustainability initiatives are also influencing the growth of the industrial gases market in Indonesia. The country has been facing various environmental challenges, such as air pollution, greenhouse gas emissions, deforestation, and waste management. To address these issues, the government has enacted several laws and policies, such as the National Action Plan on Greenhouse Gas Emission Reduction, the Clean Air Program, and the Waste Management Law. These regulations require the industrial sectors to adopt cleaner and greener technologies and practices, such as carbon capture and storage, flue gas treatment, and waste-to-energy. Industrial gases, such as carbon dioxide, hydrogen, and helium, are essential for these technologies and practices, as they help to capture, store, treat, and utilize the emissions and wastes. Furthermore, industrial gases also support the development and deployment of renewable energy sources, such as solar, wind, and hydro, by providing storage, transmission, and conversion solutions.
Technological Advancements and Innovation
Technological advancements and innovation are also driving the growth of the industrial gases market in Indonesia. The industrial gas producers and suppliers are constantly developing new and improved products and services, such as high-purity gases, gas mixtures, gas delivery systems, and gas applications. These products and services offer better performance, quality, and efficiency for the industrial gas users. Moreover, the industrial gas producers and suppliers are also collaborating with the industrial gas consumers to create customized and integrated solutions, such as on-site gas generation, gas recovery and recycling, and gas management. These solutions help to optimize the gas consumption, reduce the operational costs, and enhance the environmental benefits. According to a report by GlobalData, the industrial gas market in Indonesia is highly competitive and fragmented, with the presence of both local and international players, such as Air Products, Linde, Air Liquide, and Samator.
The industrial gases market in Indonesia is experiencing a robust growth, driven by various factors, such as economic growth, industrial development, infrastructure development, manufacturing and industrial production, environmental regulations and sustainability initiatives, and technological advancements and innovation. These factors are expected to continue to fuel the market expansion in the coming years, creating new opportunities and challenges for the industrial gas producers, suppliers, and consumers.
