Golkar and PPP agree on cement

Golkar and PPP agree on cement

JAKARTA (JP): Golkar, the ruling political organization, and
the United Development Party (PPP) both vow to fight to cut the
prices of cement which have soared recently because of supply
shortages.

Golkar Chairman Harmoko said yesterday in Jambi that his
organization has set up a special team to find effective ways of
managing cement price increases, Antara reported.

Hamzah Haz, the chairman of the PPP faction in the House of
Representatives, urged the government on a separate occasion to
do away with local reference prices and let market forces
determine the price. He said future increases could be curbed by
allowing more imports.

Early this month, the government raised the reference prices
of cement by an average of 40 percent in response to the soaring
prices on the domestic market.

The move has been widely criticized by politicians as
premature because prices could have been brought down by allowing
imports to counter the acute shortage.

Last week, a number of state-owned trading companies said they
would sell their imported cement at below the government-set
reference prices to bring the market prices down.

The reference price in Jakarta has been set at Rp 8,290, up
from Rp 5,930 previously. The prices are higher outside Java
because of the costs of transporting the cement.

Golkar, as the dominant political organization, appears to be
distancing itself from the decision to raise the cement prices,
which was followed last week by the announcement of increases in
the prices of low-cost houses by up to 14 percent.

Harmoko said Golkar's cement monitoring team is made up of
legislators.

They will monitor the prices of cement and talk to various
people in order to determine an increase that is deemed "fair" to
all.

The team will also approach the government, the association of
contractors, real estate companies and consumer groups, he said.
As well, the team will look into the impact of the cement price
increases on the prices of other basic commodities.

Harmoko said Golkar wants to find a way out acceptable to both
consumers and cement producers, both of whom he considers
supporters of Golkar.

PPP Faction Chairman Hamzah said his party believes that the
government should simply do away with the current mechanism of
pricing cement and let the market forces play their part instead.

He said Indonesia needs to import between 15 percent and 20
percent of its cement requirements each year anyway, so the
government should not limit the import level. He believes
deregulation of the import levels would prevent the recurrent
"spectacular price increases".

The government, through its own cement manufacturing plants,
could still influence prices by releasing its stock at the first
sign of market shortages, he said. (emb)