Cement price hike defended<\/p>\n
JAKARTA (JP): The government, in the face of incessant public
\ncriticism, said yesterday that its recent decision to increase
\nthe reference prices of cement by 40 percent was aimed at luring
\nmore imports and attracting investment.<\/p>\n
Coordinating Minister for Industry and Trade Hartarto said
\nIndonesia needed to import 2.5 million tons of cement and clinker
\n-- a substance used in cement production -- this year to meet the
\nincreasing demand and to stabilize cement prices at market
\nplaces.<\/p>\n
\"In the short term, the importation of cement is the only way
\nto solve the problems caused by short supply. We have no other
\nway,\" Hartarto told a press conference, which was also attended
\nby Secretary General of the Ministry of Trade, Bakir Hasan,
\nDirector General of Foreign Trade Djoko Moeljono, and Director
\nGeneral of Chemical Industries Sujata.<\/p>\n
Hartarto acknowledged that last week's decision to raise the
\nprice had not been based on domestic production costs but on
\ninternational prices.<\/p>\n
The new reference prices, averaging Rp 9,600 (US$4.32) per 40-
\nkilogram sack, are now about the same as the international price
\nlevels.<\/p>\n
According to Hartarto, a sack of cement is sold at an
\nequivalent of some Rp 11,500 in Singapore, Rp 12,000 in Brunei,
\nRp 9,200 in the Philippines, Rp 8,500 in Malaysia, Rp 9,600 in
\nSouth Korea, Rp 8,700 in India and Rp 13,795 in Japan.<\/p>\n
The government has assigned four state-owned trading companies
\n-- PT Tjipta Niaga, PT Dharma Niaga, PT Kerta Niaga and PT Mega
\nEltra -- and the existing cement companies to carry out the
\nimportation of 2.5 million tons of cement, Hartarto said.<\/p>\n
Open<\/p>\n
He emphasized that the importation of cement was open to any
\ncompany and that the duty on cement imports had been lifted.
\n\"Everybody is welcome to import cement and, wherever you want to
\nsell it, just go ahead, please. Nobody will hinder you,\" he said.<\/p>\n
He said Indonesia would continue to import cement for the next
\ntwo years because producers would only be able to meet domestic
\ndemand in 1998, when expansion projects and a number of new
\ncement factories started production.<\/p>\n
Retailers in a number of cities are reportedly selling cement
\nat prices above the reference prices set by the government.<\/p>\n
In Jakarta, for instance, retail prices of cement were between
\nRp 8,500 and Rp 9,500 per 40 kilogram sack yesterday, well above
\nthe new reference price of Rp 8,290.<\/p>\n
When asked on the current developments in cement prices,
\nHartarto said: \"We will just let prices float. I'm sure they will
\ngo down by themselves as soon as we can balance the supply and
\ndemand.\"<\/p>\n
Critics have said that the new reference prices benefit only
\ncement producers because, under the old reference prices they
\nwere already making large enough profits.<\/p>\n
Responding to the criticism, Hartarto said: \"It's true that
\ncement producers were still able to make a profit under the old
\nreference prices, but the profits were not enough to encourage
\nreinvestment in the cement industry.\"<\/p>\n
Hartarto also rejected the suggestion that the 40 percent
\nincrease in the cement reference prices could send this year's
\ninflation into two digits, as indicated by Chairman of the
\nCentral Bureau of Statistics Sugito.<\/p>\n
\"We have to keep things in proportion, because the 40 percent
\nincrease in reference prices is based on the old reference
\nprices, which were introduced in early 1993. So, the actual
\nincrease is not that much. And the government is committed to
\nmaintaining the inflation rate at less than 10 percent,\" Hartarto
\nsaid. (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/cement-price-hike-defended-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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