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