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)