The government encourages the cement industry to continuously increase
production capacity and volume considering the demand of cement in the country
that continues to increase every year. Increase in cement demand by 10% per
year makes some investors to increase production capacity and build new
factorities in Indonesia. Data of the Ministry of Industry stated that the
national cement demand in 2010 reached 40.77 million tons with domestic
production at 40.77 million tons. Demand in 2011 rose to 47.99 million tons
with national production only at 45.43 million tons.
Panggah Susanto, Director General of Manufacturing Industry Basis at the
Ministry of Industry in Jakarta on Friday (June 14), stated that last year,
demands for cement was 55.16 million tons with production capacity of the
industry in 2010 at 53.01 million tons and in 2011 fell to 52.94 million tons,
and increased to 600.47 million tons in 2012. Indonesia became an attractive
investment destination for domestic and foreign investors as it has abundant
limestone and clay as the main raw materials of cement. In addition, coal for
energy supply is cheap and readily available.
According to Panggah, the growing demand for cement in the country is
also supported by property growth as well as infrastructure development program
which are continuously encouraged by the government until the next few years.
Government project requires a lot of cement supplies and it is increasing every
year, especially with the existence of the Masterplan for Acceleration and
Expansion of Indonesia’s Economic Development (MP3EI). “MP3EI gives a very
positive effect on the increase in domestic cement sales”, said Panggah.
The same thing is also expressed by Chairman of the Indonesia Cement
Association (ASI), Widodo Santoso. Cement consumption this year rose 15% to 60
million tons. Increase in cement consumption this year is supported by
infrastructure project within the framework of MP3EI and property development
by the private sector. He predicts that there will be a lot of developers who
build apartments and houses. The reason is that Indonesia’s middle class
continues to grow and reached a large number.
Based on data of ASI, national cement consumption during January-August
2012 reached 34.30 millions tons, rose 12.6% compared to the same period last
year at 30.47 million tons. On the other hand, exports fell 64% to 60,690 tons
compared to the same period in 2011 at 172,732 tons. Thus, total cement sales
during January-August 2012 rose 10.3% from 31.25 million tons to 34.46 million
tons. In 2011, national cement production reached 45.43 million tons. While,
cement consumption in the country reached 48 million tons.
However, he admits that there are still some obstacles to the
development of cement industry. He cited that license arrangement for cement
plant investment in Indonesia is still hampered by several regulations,
including Mining Concession (IUP) in the regions. In addition, unsupportive
infrastructure also remains a problem, especially for distribution flow as well
as increase in the price of cement.
He explained that cement carrier ships is not a priority at the ports in
Eastern Indonesia, the ships have to wait on longer queue. In fact, late
penalty in the regions is quite high. Wind frequency in Eastern Indonesia
causes difficulty to sail ships. Panggah said that his party encourages cement
manufacturers to begin building packing plants at distribution points in
Eastern Indonesia. The existence of these plants is expected to reduce the cost
of distribution, at least 5% cheaper than ready-to-use products transported by
ship. (E)
Business News - July 19,2013
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