Cement firms have no plans to raise prices
Cement firms have no plans to raise prices
JAKARTA (JP): Cement producers denied rumors of a price hike
yesterday but confirmed their support for the government-set
local-reference pricing system, which they hope to maintain until
domestic production capacity exceeds demand.
Executives of PT Indocement Tunggal Prakarsa and PT Semen
Cibinong said in a hearing with Commission VI of the House of
Representatives that their companies had no plans to increase
prices in spite of increasing production costs.
The two companies currently have a combined production
capacity of 19.1 million tons of cement per annum, about 72
percent of the country's total annual capacity of 26.5 million
tons.
The Indonesian Cement Association said last month that they
intended to ask the government to raise the reference prices of
cement. News reports on the planned proposal caused prices to
increase to between Rp 10,500 and Rp 11,000 per 40-kg sack in
major cities in Java.
The government raised the local reference prices last April by
an average of 40 percent. Based on the price reference, prices in
Java are set at Rp 8,290 per sack.
A deputy president of Semen Cibinong, Masri Saridam, told the
commission for industry, mining, manpower and investment, that
the company's president, Hasjim Djojohadikusumo, also confirmed
that prices would not be increased.
An Indocement director, Ibrahim Risjad, said news reports on
the plan of cement producers to raise prices were groundless.
However, Masri confirmed that his company had complained about
increasing production costs which have hampered its expansion
plans.
Semen Cibinong plans to expand its production capacity from
9.6 million tons a year to 14.8 million tons.
Indocement's president, Sudwikatmono, also acknowledged to the
press last Friday that his company, in solidarity with smaller
producers, recently supported the association's proposed plan to
raise prices.
Cement prices frequently rise between June and September, when
construction activities increase and demand exceeds supply.
Ibrahim and Masri also suggested that the government maintain
the price reference system until the country's cement production
capacity exceeds demand.
The domestic demand for cement is projected at 27.9 million
tons per annum in 1996. The government projects that the
country's capacity will exceed demand in 1998.
Reliable data show that 36 investors have committed to
establishing new cement plants in the country with a total
production capacity of 52 million tons.
Some of the investors received approval from the government
back in 1991, but construction of their plants has been delayed
for a number of reasons, including land appropriation
difficulties. (kod)