Liberalize cement trade

After having become used to hearing reports about scarcities in cement -- a phenomenon usually accompanied by escalating prices -- Indonesia is now facing a different kind of cement problem, in the form of accumulating stocks in a number of plants. Even President Soeharto found it necessary last week to instruct the excessive supplies to be exported.

The cement problem continues to grab our attention from time to time because the price of this commodity has a significant impact on the national economy. For this reason, the problem deserves greater attention from the government. This is all the more true since the general impression has been that it is the producers (rather than the consumers) who benefit from the imposed system. Such an impression cannot be simply discarded because we can all see how easy it is for the government-set benchmark prices to be violated, and also how easy it is for producers to set up marketing zones among them.

It would seem that it is necessary for the government to take steps that go beyond merely improving the zoning concept. This practice is not in line with the government's policy to accomplish a healthy economy based on the market mechanism. Indonesia has committed itself to comply with a variety of international agreements, all of which aim at liberalizing trade. Ending zoning in the marketing of cement could help improve the market structure for this commodity. After the market mechanism has been well established, the hope is quite considerable that many local and international investors will be interested in placing their capital in the cement industry.

-- Bisnis Indonesia, Jakarta