Cement price will fall to govt levels: Tunky
Cement price will fall to govt levels: Tunky
JAKARTA (JP): Minister of Industry Tunky Ariwibowo guaranteed yesterday that cement prices at market places would soon go down to the levels of the government-set "retail prices".
Prices of cement surged after the government raised local reference prices of the construction material by over 40 percent, late last month, to an average of Rp 9,600 (US$4.09) per 40- kilogram sack and a range of Rp 8,290 in Java to Rp 11,970 in Irian Jaya.
On Monday, in a surprise move, the government announced that cement "retail prices" should be set at 10 percent below the new reference prices. However, prices have not fallen as a result.
Speaking to journalists after meeting with cement distributors here yesterday, Tunky said the current increases in cement prices were of a merely temporary nature.
"The price rises are only a psychological effect of the government's decision to increase cement reference prices. As soon as the psychological side cools down, the prices will go down by themselves," Tunky said.
He said that the currently high prices of cement did not reflect real market conditions because, he said, demand did not exceed supply.
"The market should actually be sluggish as the demand is still low due to the current rainy season. If you go to producers and distributors, you will see that they are still holding large stocks of cement in their warehouses. So, the prices will surely go down soon," Tunky said.
The government's decision late last month to increase the reference prices -- which should be references for retail prices at market places -- sparked speculation on the market and pushed prices above the set prices in a number of cities.
A number of parties, including the ruling Golkar political group and the United Development Party, expressed concern over the steep price increase and called on the government to lower the reference prices or even abolish them altogether.
The government then announced an unprecedented policy on "cement retail prices" but did not stipulate any sanctions against violators.
Market operations
When asked what the government would do if cement prices did not decrease soon, Tunky said yesterday the government would cooperate with cement producers and distributors to intervene in the market.
"Let's talk again in a week or ten days and you'll see that the prices will have come down to the government-set levels. If not, we will conduct market operations because cement is still abundant in stock," Tunky said after yesterday's meeting.
On hand at yesterday's meeting were Director General of Chemical Industries Sujata, the president of publicly-listed PT Cement Cibinong, Hasyim Djojohadikoesoemo, the chairman of the Indonesian Association of Cement Producers, Soepardjo, and representatives of cement distributors from various parts of the country.
"All of the distributors are committed to abide by all regulations, including those on pricing," Tunky said.
Under the new ruling, the cement retail price in Java, for instance, is set at Rp 7,460 per sack and in Irian Jaya at Rp 10,770, while the factory price is set at Rp 6,350 (excluding sales tax) for all areas in the country.
To reach the newly set "retail prices," Soepardjo said, cement producers have to sell their cement below the government's set factory price of Rp 6,350 per sack. "Otherwise, we cannot reach the newly set retail price of Rp 7,460 for Java," he said.
Daddy Hariadi, a director of the country's largest cement producer, PT Indocement Tunggal Prakarsa, said yesterday that his company's factory prices range from Rp 5,600 to Rp 5,800 per sack, depending on the distance from the factory.
A distributor of Indocement said yesterday that he bought cement for Rp 7,000 per sack from the company's main distributor and resold it for Rp 7,200.
He estimated that end-users in Jakarta have to pay Rp 7,750 per sack, well above the city's newly set "retail price" of Rp 7,460.
Antara reported that cement prices in a number of cities decreased slightly yesterday.
In Semarang, for instance, a sack of cement was sold at Rp 7,900 yesterday, down seven percent from Rp 8,500 on the previous day. However, prices were still above the newly set "retail price" of Rp 7,460 for the city. (rid)