Two cement producers defend price increase<\/p>\n
JAKARTA (JP): Two state-owned cement companies, PT Semen
\nPadang and PT Semen Tonasa, defended their recent decisions to
\nincrease the prices of their products to exceed the government-
\nset local price references.<\/p>\n
In a hearing with Commission VI of the House of
\nRepresentatives yesterday, president of Semen Tonasa Soebyakto
\nsaid his company's main concern was not to meet the government's
\nprice references but to overcome cement shortages by raising
\nprices.<\/p>\n
He acknowledged that his company did not consult with the
\nministers of finance and industry before deciding to raise its
\nsales price.<\/p>\n
\"If we had to wait for the government's consent, we might have
\nfaced serious losses as our production costs grew higher than the
\nreference price level, which was introduced early last year,\"
\nSoebyakto said. \"So, let's not talk about the reference pricing
\nsystem now. It's the government's business, not ours.\"<\/p>\n
Sharing Soebyakto's view, president of Semen Padang Nizar D.
\nKayo stated that his company suffered financial losses in the
\nfirst semester of this year because its sales price was 1.35
\npercent higher the production costs.<\/p>\n
Nizar explained to the commission -- which deals with
\nmanufacturing, mining and energy -- that during the January-June
\nperiod, his company suffered losses of Rp 225 million
\n(US$104,000).<\/p>\n
Effective in July, the West Sumatra based Semen Padang, raised
\nits sales price by four percent to Rp 5,775 per 40-kilogram sack
\nat its warehouse. This resulted in the increase of cement prices
\nin the market place to about Rp 6,600 per sack, far above the
\nlocal reference price of Rp 5,930.<\/p>\n
Soebyakto said the prices of the South Sulawesi-based Semen
\nTonasa's cement at market places have also increased to Rp 6,600
\nper sack.<\/p>\n
Criticism<\/p>\n
However, a member of the commission, Iskandar Mandji,
\ncriticized the two companies's unilateral decisions to raise
\nsales prices because the establishment of prices references was
\naimed at stabilizing the market.<\/p>\n
\"Because your companies are state-owned, what you have done
\ncould set a bad precedent. You decision indicates that state
\ncompanies are not concerned with the welfare of the public,\"
\nIskandar remarked.<\/p>\n
Responding to Iskandar's comment, Nizar said the other mission
\nof state companies is to garner profits so that they will
\ncontinue to healthy operations.<\/p>\n
\"If my company continues to suffer from losses it cannot
\nexpand to meet the increasing demand. On the one hand, we have to
\nstabilize cement prices but, on the other hand, we have to meet
\nincreasing demand,\" Nizar said.<\/p>\n
Currently, Semen Padang has a production capacity of 2.9
\nmillion tons per annum or 13 percent of the country's total
\nproduction capacity of 22.9 million tons, while Semen Tonasa's
\nannual capacity is 1.2 million tons.<\/p>\n
Semen Padang is assigned to distribute its products in Sumatra
\nand Semen Tonasa in eastern provinces.<\/p>\n
Indonesia's demand for cement this year is expected to reach
\n20.9 million tons. However, substantially increasing demand in
\nseveral provinces during this dry season has caused supply
\nshortages.<\/p>\n
To meet increasing demand in eastern provinces, Semen Tonasa
\nhas been committed to import 70,000 tons of cement from China and
\n50,000 tons of clinker -- a substance used in the production of
\ncement -- from South Korea and Thailand.<\/p>\n
Demand for cement in Java, which accounts for almost 70
\npercent of the country's total cement utilization, is met by four
\ncompanies. They are PT Indocement Tunggal Prakarsa, the country's
\nlargest cement firm with an annual capacity of nine million tons,
\nPT Semen Cibinong, PT Semen Nusantara and PT Semen Gresik. (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/two-cement-producers-defend-price-increase-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}