Cement prices to remain stable

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)