First quarter sales of cars, heavy equipment and cement moved up strongly, indicating that the effects of a global economic downturn had yet to dent the domestic economy.
Car sales in the first quarter rose 61% to 135,607 vehicles, data compiled by the country's biggest car dealer, PT Toyota Astra Motor (TAM), showed Friday (11/4/08), Thomson Financial reported.
In March, domestic sales reached 46,720 vehicles, down from 47,507 in February but higher than the 33,857 vehicles sold in March 2007.
Another Astra subsidiary, PT United Tractors, said sales of heavy equipment rose 44% in the quarter from a year earlier because of increased orders for coal-extraction and construction machinery. The company is Indonesia's biggest seller of heavy equipment.
The company sold 1,168 units of heavy equipment in the first three months of the year, according to preliminary data, a company official said.
Meanwhile national cement consumption rose 16.8% in the first quarter from a year ago, driven by strong demand outside Java, Indonesian Cement Association (ASI) chairman Urip Timuryono said Friday.
Domestic cement consumption in the period reached 8.78 million tons, against 7.52 million a year earlier.
In March, domestic cement consumption reached 2.99 million tons, rising 15.5% from the same month a year ago. In February, cement consumption totaled 2.7 million tons.
Timuryono said the first-quarter performance was surprising given that the government only expected the economy to grow in a range of 6.2% to 6.3%. "Normally, cement consumption growth is pretty close to GDP growth. So it is interesting to study what the key factors had been," he said.
The country’s third largest cement maker, PT Holcim Indonesia, meanwhile said it was planning to spend $500 million on a new cement plant with production capacity of 1.5 million tons a year.
Investor Daily quoted company president Timothy Mackay as saying the expansion would boost the company’s production capacity to 9.4 million tons per annum.
Reports meanwhile said the world's largest steel maker, ArcelorMittal (MT), will invest $3 billion into building a plant in the province of Kalimantan, once a feasibility study is conducted.
Mohammad Lutfi, head of the Investment Coordinating Board, told reporters Thursday the new plant will boost Mittal's annual production capacity in Indonesia to 700,000 metric tons from 60,000 tons currently.
More investment was expected from the Middle East with the passage by the House of Representatives on Thursday of a bill on Islamic finance, the Financial Times reported.
Rakesh Bhatia, the head of HSBC in Indonesia, said the legislation, which has taken two years to complete, was "extremely positive".
"Internationally, there is plenty of money available in this area, so the law will give the government and the country access to additional capital," he said. "We're already in advanced talks with companies that are just waiting for the government to take the lead."
Finance Minister Sri Mulyani Indrawati told the FT that the government intends to issue up to $1.6 billion in sukuk, or Islamic bonds, in the second half of this year, once the law's implementing regulations have been finalized.
The Indonesian Stock Exchange composite index closed 3.0% higher at 2,303.93 on Friday, with sentiment lifted by advances on Wall Street overnight and in Asian markets, Agence France-Presse reported.