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)