Cement prices raised to adjust rupiah's fall

Cement prices raised to adjust rupiah's fall

JAKARTA (JP): Indonesian cement producers increased yesterday
the factory price of cement by between three percent and five
percent to adjust the rupiah's sharp drop against the U.S.
dollar.

Sudwikatmono, president of the country's largest cement
producer PT Indocement Tunggal Prakarsa, said the rise was
approved by the Association of Indonesian Cement Producers.

"Members of the association met here last week and agreed to
increase the cement price between three percent and five percent
per bag," Bisnis Indonesia quoted him as saying.

Sudwikatmono also said the increase in the factory price of
cement should not necessarily increase the retail price.

"I guarantee the increase will not have a bad impact on the
public," he said.

But according to local media reports, the retail cement price
in several cities in Central Java, for example, increased to
between Rp 12,500 (US$4.38) and Rp 14,000 per 50-kilogram bag,
higher than the retail price of Rp 10,000 per bag set by the
government for the province.

The government periodically sets the retail price of cement in
every province.

The Minister of Trade and Industry Tunky Ariwibowo previously
warned cement makers not to increase the cement price amid this
tight monetary policy.

Sudwikatmono, a close associate of President Soeharto, said
cement makers had to increase the cement price as a result of the
tight monetary policy imposed by the government.

Bank Indonesia raised late last month its key interest rates
to between 20 percent and 30 percent per annum to shore up the
rupiah, which had lost over 20 percent since the central bank
floated the currency in mid-August.

This prompted an increase in bank deposit rates to between 25
percent and 30 percent. As a result, short-term loan interest
rates also increased to above 30 percent.

Sudwikatmono admitted yesterday the demand for cement had
declined in the past few weeks as builders and individual buyers
halted their purchases due to the rupiah scarcity.

"This is seen from the declining demand of cement in the
market," Sudwikatmono said.

He said Indocement would soon import 30,000 tons of cement
from Japan to anticipate cement's scarcity in the country.

Sudwikatmono said imports were expected to meet a possible
surge in demand in coming months. (aly)