Bappenas wary of hikes in cement prices

JAKARTA (JP): The hikes in cement prices could jeopardize some of the ongoing development projects sponsored by the government, State Minister for Development Planning Ginandjar Kartasasmita says.

Ginandjar, who is also chairman of the National Development Planning Board (Bappenas), told a hearing with the House of Representatives yesterday that unless the cement shortage is overcome immediately, the government may see the costs of many of its projects skyrocket.

Given the government's limited funds, the soaring costs could also mean that the government must slow down its development programs, he warned.

Another troubling factor is the impact of the cement prices on inflation at a time when the government is fighting hard to keep it low, he added.

During the first eight months of this year alone, inflation reached 6.85 percent, far higher than the five percent per annum targeted by the government under its Sixth Five Year Development Plan (Repelita VI).

"Bappenas is paying serious attention to the problem," Ginandjar told members of the House's Commission X. "This situation serves as a test case for the government."

Housing developers said that they have felt the brunt of the cement price hikes, and this will in turn be passed on to consumers.

Chairman of Indonesian Real Estate Association (REI) Enggartiasto Lukito, during the opening ceremony of REI Expo'94 yesterday, said he estimated that cement producers have reaped no less than Rp 250 billion (US$115 million) in profits from the cement price boom.

"Just imagine that with such money, we could build 55,000 low- cost houses of 21 square meters each for those of low-income levels," Enggartiasto said.

Halt

He added that many developers have simply halted building low- cost houses because the higher cement prices have slashed the small profit margins to which they are entitled by the government.

The prices of houses for the middle and upper classes have increased by around five percent.

Ginandjar told the DPR yesterday that the government plans to import some 800,000 tons of cement to ease the domestic shortage and bring the price down.

Officials had earlier said that Indonesia would buy cement from India, Thailand and China.

The minister rejected an accusation that the cement shortage was caused mainly by poor planning and anticipation, although he admitted that the economy has been growing faster than the government had anticipated.

He said Indonesia must raise its cement production capacity in the next five years to 33 million tons a year from the present 21 million tons.

The Indonesian Cement Association has stated that cement imports from India and Thailand could be sold here at Rp 8,300 per 40-kilogram bag at the lowest and those from China at Rp 7,500. These prices would still be much higher than the government-set price reference of Rp 5,930 for Java.

In the past few weeks, cement prices in Jakarta rose to as high as Rp 15,000 per sack, in Bali to Rp 11,000, or 57 percent higher than the local price reference of Rp 6,975, and in Jayapura, Irian Jaya, at Rp 48,000, or six times higher than the local price reference of Rp 7,965. (par/als)

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