Cement rescheduling won't affect supply

JAKARTA (JP): Director General of Domestic Trade at the Ministry of Industry and Trade Ilchaidy Ilyas said yesterday the government's decision to review several cement projects would not affect future supply.

He said those cement projects, if postponed, would lower the country's cement production growth in the future but the demand for cement would also decline due to the postponement of the country's large industrial infrastructure projects.

"Therefore, we need not worry about (shortages of supply)," he was quoted by Antara as saying after inaugurating the electrical wire factory of PT Karya Yasantara Cakti in Cikampek, West Java.

The government recently announced a retrenchment measure to cope with the rupiah's depreciation against the U.S. dollar, which included the postponement and review of 156 government projects worth Rp 111.18 trillion (US$38 billion).

Eighty-one projects have been postponed and 75 others are under review.

The reviewed projects include six government cement projects: Tuban V of PT Semen Gresik, Kupang III of PT Semen Kupang, Jabar I of PT Semen Padang, Jabar II of PT Semen Padang, Tonasa V of PT Semen Tonasa and Jambi I of PT Semen Padang & PT Semen Baturaja.

Minister of Finance Mar'ie Muhammad said last week that based on the results of a study, projects would either be continued, postponed or rescheduled.

Ilchaidy said the cement projects were designed to anticipate the country's growing demand for cement in the construction and toll road sector in the future.

But a significant growth in cement demand was not likely to occur due to the postponement of many toll road and construction projects.

In the toll road sector alone, 36 projects have been postponed and 17 projects are under review.

Ilchaidy said there was currently an oversupply of cement in Indonesia, which reached 2 million tons a year.

He said if local demand exceeded the country's production capacity in the future, Indonesia could still import from Thailand which now produced more cement than demanded by the local market.

According to Ilchaidy, Thailand's cement production totals 32 million tons a year, while the country's demand has declined to 20 million tons a year amid the monetary crisis which has battered the country since July. (jsk)