Cement price hikes may hurt governments's housing program

Cement price hikes may hurt governments's housing program

JAKARTA (JP): The hikes in cement prices could severely undermine the government's program to build houses for the poor, Minister of Public Housing Akbar Tandjung said on Saturday.

Akbar told reporters that cement is the main component in the construction of houses, so that even a small increase will affect the overall cost.

He also noted that in the past, any increase in the price of cements was followed by increases in the prices of other construction materials.

The minister was speaking during a break at the congress of the Alumni Association of the University of Indonesia's School of Technology.

The Association of Cement Producers, a powerful lobby, last week disclosed its intention to propose to increase the local reference prices of cement, which are set by the government. Association chairman Soepardjo said that the current prices were no longer economical because of the increases in raw materials.

The local reference prices of cement were increased by 40 percent only last April.

Akbar said the government has not made up its mind on whether or not to grant the cement producers' request. The decision will be made after the government meets with the association this week.

Some members of the House of Representatives have stated their opposition to the increase and said they would block the proposal. Real Estate Indonesia, the association of housing developers, have also voiced their objection saying that the proposal was "nonsensical".

"The association of cement producers should take public reaction into consideration," Akbar said.

The minister said any increase in cement prices would make it difficult for the government to build at low cost, especially since the government has already made commitments to maintain their prices.

But whether or not the proposed hikes are approved, the government will continue to strive to meet its target of building 500,000 units of low cost houses during the current Sixth Five Year Plan, he said.

He disclosed that the government is also considering using "inferior cement" for some types of houses to keep them affordable to the poor.

When news of the cement producers' plan to seek price increases broke last week, prices jumped in some areas, including Jakarta, where it reached between Rp 10,500 and Rp 11,000 per 40 kg sack, compared to the government-set price of Rp 9,500, and to between Rp 11,500 and Rp 12,000 per sack in Surabaya, against the government-set price of Rp 9,354.(31)