Cement prices to remain stable

JAKARTA (JP): Cement prices will not be raised again this year despite the continuing depreciation of the rupiah against the U.S. dollar, the president of the country's largest cement producer, PT Indocement Tunggal Prakarsa, said.

Sudwikatmono said a drop-off in cement sales precluded local producers from increasing the price of their product.

"How can we increase cement prices again while we have trouble selling our product now?" Sudwikatmono said after attending the ground-breaking ceremony for Techpark Cikarang Industrial Estate yesterday.

Sudwikatmono, a close associate of President Soeharto, admitted that demand for cement had declined by at least 10 percent in the past two months.

He said builders and individual buyers stopped buying cement after the government imposed a tight monetary policy in early August.

The postponement of some industrial infrastructure projects, both by the government and private investors, had slowed down demand, he said.

The Indonesian Cement Producers Association increased last month the factory price of cement by between 3 percent and 5 percent per bag in response to the sharp drop in the rupiah's value against the U.S. dollar.

Sudwikatmono hailed the decision, saying last month that the rupiah's depreciation against the greenback had increased cement production costs as some raw and supporting materials like gypsum and coal were imported from Thailand and Australia respectively.

The imported components in cement production accounts for some 3 percent of total production costs.

The unilateral increase in cement factory prices had resulted in higher retail prices than the government-set reference prices for provinces.

Consumers in Jakarta, for instance, have to pay between Rp 11,000 (US$3) and Rp 12,500 for a 50-kilogram bag, more than the official price of Rp 10,000.

Sudwikatmono has warned Indocement's distributors not to raise retail prices too high because it would have a bad impact on the public.

The current drop in cement sales was caused by diminishing demand rather than the increasing prices, he said.

Publicly listed Indocement, the nation's largest cement manufacturer, has nine production units in West Java and another in South Kalimantan, which is jointly owned by Kodeco of South Korea.

It currently produces more than 10 million tons of cement annually. (08)