Economists confirm robust prediction for cement demand
Economists confirm robust prediction for cement demand
Adianto P. Simamora, The Jakarta Post, Jakarta
Economists on Monday confirmed a prediction made by the cement
industry association that domestic consumption would return to
pre-crisis levels this year.
They also agreed that the robust demand would be driven mainly
by the construction of new houses and renovations throughout the
country.
Raden Pardede of the Danareksa Research Institute said that
the rise in worker salaries and the banking sector's move to
ease requirements on consumer loans had played a big part in
boosting domestic cement consumption.
"There are many people who are now buying cement for the
construction of residential houses and renovations after delaying
works in the previous years," Raden told The Jakarta Post.
Muhammad Ikhsan of the University of Indonesia concurred,
saying there was now a shift in investment among low-income
families in the country.
"People in Jakarta and remote areas are now renovating their
houses, this is a new investment activity among the lower-income
level people."
He said that in villages, many people were renovating their
houses after getting money from working overseas.
"The money from Indonesians working overseas has made a
significant contribution on cement demand this year," Ikhsan
said.
Overseas workers send home at least US$500 million annually.
The Indonesian Cement Association (ASI) said earlier that
domestic cement consumption would reach a record high of 29
million metric tons this year, up from last year's 25.5 million
tons.
The association did not say what the reasons were for the
stronger demand, but industry players said that it would be
mainly boosted by new housing projects.
ASI data shows that in the first six months of this year,
domestic cement consumption reached 12.6 million tons.
It said that about 8 million tons were used in Java, 2.7
million tons in Sumatra and 717,309 tons in Sulawesi.
Domestic demand for cement has been in the doldrums since the
economic crisis hit the country in 1997. Demand dropped by 31
percent to 19 million tons in 1998 from 27 million tons in 1997.
The property sector, which had fueled demand for cement before
1997, was badly effected by the crisis, forcing many developers
out of business.
Meanwhile, the chief economist of state-owned Bank Mandiri,
Martin Panggabean, said that although domestic cement consumption
would increase this year, he doubted the figure would reach 29
million tons.
He said that the consumption level would probably only
increase to around 27 million tons as banks had not yet really
started channeling money in a big way to the property sector.