Malaysia: permanent solution sought on cement supply

Malaysia: permanent solution sought on cement supply
Published: 04 July 2011

A severe slowdown in the delivery chain and supply of Portland cement persists in Malaysia despite recent assurances from Cement Industries Sabah (CIS) that production is back to normal and imports are also back on track.

"I was assured by a very senior officer at CIS about 10 days ago that production was back to normal but, until today, the situation persists," said Parti Bersatu Sabah (PBS) Information Chief, Datuk Johnny Mositun.

There are long lorry queues and hardware dealers are turning away buyers or limiting sales to five 50kg bags per buyer or charging between MYR15-17 (US$4.99-5.66)/bag against the usual price of MYR14.20/bag. "I just don’t know what to make of this confusion," said Johnny Mositun.
He added that the recurring shortages of cement in Sabah were impacting negatively on Sabah’s construction industry and slowing down development.

"And it goes without saying that this is also one of the factors that adds to the cost of development projects in Sabah," he said.

Mositun said Sabah would be well-advised to stop relying on ad-hoc measures each time a shortage of cement occurred for whatever reason and called on the state government to come up with a long-term solution. "As long as production cannot meet demand, we’ll have one problem or the other that will create shortages of cement in Sabah," he said. Mositun said it was a fact that even by operating at maximum capacity, CIS could not produce enough cement for Sabah’s needs. "Neither the clinker plant nor the storage facility at Lahad Datu add to production capacity. They serve different purposes.

The imports by CIS to make up the shortfall in production are also subject to external forces and factors.
"The final and permanent solution lies in stepping up production, either by expanding the capacity of CIS or setting up another cement factory, preferably on the east coast," he said.

He said he was aware that the high cost of setting up a cement manufacturing and the returns on investment deterred CIS and other parties from doing so."That’s why I suggest the government step in. It did so in the past when it set up CIS, so why not do the same thing now? It can take the initiative to set up a new company, get it listed and raise additional funds from investors. Alternately CIS could be listed on Bursa Malaysia to raise funds for expansion," he said.

He said he was only making these suggestions for CIS and the state government to ponder. "The possibilities should be considered, and if feasible and practical they can be implemented. Otherwise the status quo will remain and we might as well resign ourselves to the fact that this problem will keep recurring well into the future, at our own cost," he said.