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)