Golkar asks govt to curb cement prices

JAKARTA (JP): The ruling Golkar faction at the House of Representatives (DPR) yesterday appealed to the government and all related parties to take immediate actions to curb the soaring cement prices.

"We have to check if manufacturers have produced cement in accordance with their production capacities and if distributors have observed the existing regulations properly," Budi Haryanto, the faction's second secretary for industry and development, told newsmen here yesterday.

Accompanied by fellow legislators Ali Rasyidi and Marka Ridwan, Budi criticized the government as too slow in handling cement problems, which results in the soaring prices.

Yesterday, cement prices in a number of outlets in Jakarta were offered at Rp 11,000 (US$5) per 40-kilogram sack, almost twice the government-set local price reference of only Rp 5,930.

"The government should have taken the necessary actions to curb the increasing prices. If it is left uncontrolled, cement prices could reach Rp 15,000 per sack, and if that occurs, it could hamper the continuation of development programs," Budi said.

He noted that his faction cannot accept suggestions from cement producers to eliminate the price reference system.

Producers said the prices set by the government cannot cover their production costs.

"The price reference system should be maintained as it is the only instrument the government can use to control cement prices," Budi said. "The Golkar faction will conduct its own calculations about the price references in connection with production costs."

Multiplication

Ali Rasyidi, who is also vice chairman of the House's Commission VI dealing with manufacturing, mining and energy industries, noted that the most effective way to handle the current cement problems is to multiply the supply in order to meet the demand.

"The current cement problem of deals mostly with shortages, and therefore the most appropriate solution is increasing the supply. We hope that the producers and other related parties are willing to help alleviate these cement shortages," Rasyidi was quoted by Antara news agency as saying.

Meanwhile, Director General of Chemical Industries Sujata was quoted by Kompas daily yesterday as saying that the government cannot guarantee that cement supply will satisfy the demand until next year although there will be a considerable increase in the country's production capacity of at least 2.8 million tons per annum.

The capacity increase is expected to come from the second unit of PT Semen Gresik in Tuban with its annual capacity of 2.3 million tons and from the optimization of PT Indocement Tunggal Prakasa, which will give an additional production of 500,000 tons annually.

Sujata said next year's total production capacity of all cement factories in the country is projected to be 21.3 million tons, while the demand will be 20.9 million tons.

"You see, the difference is very small. So, when the demand is suddenly soaring, I don't think that the supply-and-demand balance will be safe enough," Sujata noted.

He acknowledged that the government faces difficulties in predicting the actual demand each year. The government had predicted that the increase of this year's demand will be around 12 percent. "But, until last month, the demand increase had reached 19 percent." (rid)