Economists confirm robust prediction for cement demand<\/p>\n
Adianto P. Simamora, The Jakarta Post, Jakarta<\/p>\n
Economists on Monday confirmed a prediction made by the cement
\nindustry association that domestic consumption would return to
\npre-crisis levels this year.<\/p>\n
They also agreed that the robust demand would be driven mainly
\nby the construction of new houses and renovations throughout the
\ncountry.<\/p>\n
Raden Pardede of the Danareksa Research Institute said that
\nthe rise in worker salaries and the banking sector's move to
\nease requirements on consumer loans had played a big part in
\nboosting domestic cement consumption.<\/p>\n
\"There are many people who are now buying cement for the
\nconstruction of residential houses and renovations after delaying
\nworks in the previous years,\" Raden told The Jakarta Post.<\/p>\n
Muhammad Ikhsan of the University of Indonesia concurred,
\nsaying there was now a shift in investment among low-income
\nfamilies in the country.<\/p>\n
\"People in Jakarta and remote areas are now renovating their
\nhouses, this is a new investment activity among the lower-income
\nlevel people.\"<\/p>\n
He said that in villages, many people were renovating their
\nhouses after getting money from working overseas.<\/p>\n
\"The money from Indonesians working overseas has made a
\nsignificant contribution on cement demand this year,\" Ikhsan
\nsaid.<\/p>\n
Overseas workers send home at least US$500 million annually.<\/p>\n
The Indonesian Cement Association (ASI) said earlier that
\ndomestic cement consumption would reach a record high of 29
\nmillion metric tons this year, up from last year's 25.5 million
\ntons.<\/p>\n
The association did not say what the reasons were for the
\nstronger demand, but industry players said that it would be
\nmainly boosted by new housing projects.<\/p>\n
ASI data shows that in the first six months of this year,
\ndomestic cement consumption reached 12.6 million tons.<\/p>\n
It said that about 8 million tons were used in Java, 2.7
\nmillion tons in Sumatra and 717,309 tons in Sulawesi.<\/p>\n
Domestic demand for cement has been in the doldrums since the
\neconomic crisis hit the country in 1997. Demand dropped by 31
\npercent to 19 million tons in 1998 from 27 million tons in 1997.<\/p>\n
The property sector, which had fueled demand for cement before
\n1997, was badly effected by the crisis, forcing many developers
\nout of business.<\/p>\n
Meanwhile, the chief economist of state-owned Bank Mandiri,
\nMartin Panggabean, said that although domestic cement consumption
\nwould increase this year, he doubted the figure would reach 29
\nmillion tons.<\/p>\n
He said that the consumption level would probably only
\nincrease to around 27 million tons as banks had not yet really
\nstarted channeling money in a big way to the property sector.<\/p>",
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