Indonesia to export 4.5 million tons of cement next year

JAKARTA (JP): After years of importing hundreds of tons of cement, Indonesia is projected to export 4.5 million tons of cement next year due to an oversupply in the domestic market.

Minister of Industry and Trade Tunky Ariwibowo revealed yesterday that Indonesia was likely to see an oversupply of 6.7 million tons next year.

"Of that oversupply, 4.5 million tons would be destined for export and 2.2 million tons would be used for domestic stocks to anticipate a sudden increase in demand," Tunky said at a working session with the House of Representatives Commission V for manpower and trade.

Tunky said the overall cement supply for 1998 would reach 36.06 million tons, a 29.3 percent increase from the 27.88 million tons this year.

Domestic demand for cement was projected to grow only by 13 percent to 29.34 million tons next year, up from 27.94 million tons this year.

"Demand for cement has declined since September, caused by the domestic monetary situation," Tunky said, referring to the currency crisis currently gripping the country.

Indonesia has had to come to grips with a crisis which has resulted in the quick depreciation of the rupiah against the U.S. dollar since early July. The rupiah has lost some 40 percent of its value since then.

"It is projected that this monetary situation will push down further domestic demand for cement for 1998," Tunky added.

However, the supply of cement has continued to increase as expansions of existing cement plants and new investments in cement plants have gone on as scheduled.

The expansion of four existing cement plants and the building of three new cement plants, with a combined installed capacity of 12.65 million tons, will result in next year's increase in domestic cement production.

Tunky did not detail which cement plants would be operational next year. But with an addition of 12.65 million tons in capacity, total annual installed capacity of all domestic cement plants would reach 46.27 million tons next year.

This year alone, Tunky said, Indonesia saw four cement expansion projects, with a combined installed capacity of 6.29 million tons per annum.

They came from the country's largest cement producer PT Indocement Tunggal Prakarsa's 10th unit with an annual capacity of 1.3 million tons; state-owned PT semen Gresik's Tuban II project with 2.3 million tons; PT Semen Cibinong's 5th unit with 2.6 million tons; and PT Semen Kupang with 90,000 tons.

"With such a huge oversupply for 1998, it is expected that cement prices will remain stable until next year," Tunky said.

As part of its deregulation measures announced early last month, the government scrapped its pricing policy for cement, termed as the regional reference prices for cement.

Since the early 1990s until two years ago, Indonesia had been struck by annual cement crises, driven by supply shortages especially during the second semester when developers started construction of public and private projects.

The government then encouraged domestic cement producers as well as general importers to import cement to satisfy the growing domestic demand. It also established cement floating terminals to facilitate the flow of cement distribution both from domestic producers and importers.

In the last two years, no major cement shortages or problems were reported in the country. Only some minor cases, especially price increases, were recorded in some areas.

To facilitate the supply of cement across the country, Tunky said, state-owned cement plants would continue to build more cement packing plants in areas far away from cement production plants.

Next year, state-owned PT Semen Tonasa, an affiliate of Semen Gresik incorporated in Tonasa, South Sulawesi, will build two more packing plants in Lembar, West Nusa Tenggara, and in Palu, Central Sulawesi, with an annual production capacity of 300,000 tons per annum each.

State-owned PT Semen Padang, another affiliate of Semen Gresik located in Padang, West Sumatra, will build two packing plants in Ciwandan, West Java, and Lampung, with an annual capacity of 600,000 tons each.

Currently, Tunky said, state-owned cement producers have six packing plants outside their production sites, with an annual capacity of 300,000 tons each.

They are in Ujung Pandang, South Sulawesi, in Bitung, North Sulawesi, in Samarinda, East Kalimantan, in Banjarmasin, South Kalimantan, in Celukan Bawang, Bali and in Ambon, Maluku.

"We will use some of those packing plants as a base to export cement to neighboring countries, especially the Philippines and Brunei," Tunky said. (rid)