Govt to revoke cement licenses
Govt to revoke cement licenses
JAKARTA (JP): The Central Java office of the Investment Coordinating Board wants the revocation of 11 licenses for the establishment of cement plants in the province because their sponsors have failed to start the projects after some years.
The office's chief, Soedarsono, told Antara in Semarang over the weekend that his office has asked the government to revoke the licenses because the would-be investors, whose licenses were approved by the Investment Coordinating Board (BKPM) in the period between 1991 and 1994, did not show any signs of starting the construction of their cement projects.
A government ruling says that any investment license can be revoked if its sponsor fails to start its project in the three years after being granted it.
The 11 companies holding the licenses for the cement projects, with an annual production capacity of between 600 tons and 3.5 million tons, include PT Pantja Mekar, which plans to construct a cement plant in Grobogan, PT Makmur Jaya Utama in Pati, PT Java Semen in Grobogan, PT Semen Gombong in Gombong, PT Himkonam Pertiwi in Grobogan, PT Semen Wonogiri in Wonogiri and PT Tensindo Semen in Pati. All these firms received their licenses in 1990 and 1991.
The other sponsors of the cement projects also include PT Gunung Ngadeg Djaja and PT Patriot Global Semen, which received licenses in 1992 and 1993.
Soedarsono said the main reason for the delayed construction of the cement projects is related to the poor knowledge of the investors on the conditions at the sites.
But a director of the largest cement producer in Indonesia, PT Indocement Tunggal Prakarsa, said in a hearing with the House of Representatives' Commission VI here last week that the main barrier for the establishment of new cement plants is the unfeasibility. of such projects.
The director, Ibrahim Risjad, told the hearing that the rate of return on investment of a cement plant is very low.
He said high interest rates and marginal profits from the cement industry have caused investors to be reluctant to realize their commitment to build new cement plants.
Cement prices on the domestic market are determined by the government with its local price reference system.
Ibrahim said it needs an investment of about Rp 800 billion (US$345 million) to establish a cement factory with an annual production capacity of one million tons.
Indonesia's cement plants have a current total production capacity of 27.9 million tons, while demand is predicted at 28.5 million tons this year. (kod)