Indocement will boost production by 50 percent<\/p>\n
JAKARTA (JP): Indonesia's largest private cement maker PT
\nIndocement Tunggal Prakarsa expects to boost its production by
\nalmost 50 percent within two years, the company has said.<\/p>\n
The company's finance director Benny S. Santoso said yesterday
\nIndocement would be able to produce about 15.8 million tons of
\ncement in two years, up from 10.8 million tons currently.<\/p>\n
Additional production would come from its eleventh plant in
\nCitereup, West Java, which would start operating in early 1999,
\nand from its affiliate, PT Indo Kodeco Cement in South
\nKalimantan, Benny said.<\/p>\n
The new plant, in which construction started in December
\n1996, would be able to produce 2.5 million tons of cement per
\nyear, and Indo Kodeco would produce 2.45 million tons by next
\nyear, he said.<\/p>\n
\"Overall, we expect to export about 10 percent of our 1999
\nproduction to neighboring countries such as Singapore, Bangladesh
\nand Malaysia,\" he said yesterday after a loan signing.<\/p>\n
Benny said the ongoing Citereup plant project would cost about
\nUS$229 million in investments, some of which would come from
\noffshore loans.<\/p>\n
The publicly-listed company, part of the Salim Group, signed
\nyesterday a loan agreement worth $132.74 million with the Export
\nImport Bank of Japan (Exim) to partly finance the cement plant
\nexpansion.<\/p>\n
The loan was initially given in Japanese yen worth 14.98
\nbillion yen.<\/p>\n
The loan had an interest rate of 6.3 percent annually, or
\napproximately 40 basis-points above the London Inter Bank Offered
\nRate (LIBOR). It is due to mature in 10 years.<\/p>\n
Benny said the company would finance the remaining $96.26
\nmillion of the project costs using its own funds.<\/p>\n
The chief representative of Exim in Jakarta, Seiichiro
\nShimamoto, said yesterday the loan was the first one given by the
\nbank to a fully-operated private company in Indonesia.<\/p>\n
\"Traditionally, we have only given loans to the government,
\nand governmental agencies or projects, and to do that we needed a
\nletter of guarantee from the government,\" Shimamoto said.<\/p>\n
In Indocement's case, however, the exporters would guarantee
\nthe commercial risks to the Exim bank, while the bank would
\nguarantee the country's risk, he said.<\/p>\n
Shimamoto said the bank decided to grant the loan to
\nIndocement because it was confident that the company would remain
\na major cement supplier in Indonesia.<\/p>\n
He said the country's annual cement consumption of about 130
\nto 140 kilograms per capita was still very low and would continue
\nto increase.<\/p>\n
As a developing country, Indonesia still has a high demand for
\ncement, he said.<\/p>\n
Commenting on the fact that the cement industry was facing an
\noversupply partially caused by many project cuts, Benny said he
\nremained optimistic that the country's cement industry would pick
\nup again within the next two years.<\/p>\n
\"The cement industry is a long-term industry, while the
\noversupply is temporary,\" he said.<\/p>\n
\"We still have to prepare to supply our customers when the
\ndemand rises again,\" he said.<\/p>\n
Indocement's executive director D. Hariadi said yesterday the
\nannual growth of the cement demand might decline this year by
\naround eight percent from an average of 10 to 12 percent before
\nthe currency crisis, which had caused many projects to be delayed
\nor halted.<\/p>\n
Hariadi said the Indonesian Cement Association predicted next
\nyear's growth would be around five percent.<\/p>\n
\"But we expect the growth will be no more than 3.5 percent
\nnext year,\" he said.<\/p>\n
He said domestic demands for Indocement's products had not
\ndeclined much since the crisis, but payments had been made
\nmore slowly. (das)<\/p>",
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