Indonesia: cement price hike quite reasonable

Indonesia: cement price hike quite reasonable
Published: 22 April 2009

Indonesian cement producers felt that the cement price hike was quite reasonable as it was based on many acceptable reasons.

"One of the reasons is the energy component, which is very decisive to setting cement prices," communications chief of state cement company PT Semen Gresik Tbk Saifuddin Zuhri said here Tuesday.

He said Semen Gresik is now using coal energy. Since the price of coal had been raised recently, this should not be ignored by the Business Competition Supervisory Commission in setting cement production cost.

Earlier, he said, on April 7, 2009, KPPU communications director A Djunaidi said that there has been allegations that the price of Semen Gresik cement was 30-40 percent higher than those of other producers, whereas the KPPU had collected its information based on data on 2007 international cement prices, while the price of Indonesian cement reached 83.8 US dollars per ton.

He also said that the cement prices in Malaysia stood at 62.6 US dollars per ton, in the Philippines 84.5 dollars per ton, in Vietnam 57.75 dollars and in Thailand 67.87 dollars per ton.

This he said meets the definition of a cartel. He added that fuel oil is used merely for cement distribution, not to mention the loss due a difference in exchange rates.

"It is crystal clear we have been buying coal with the US dollar, in addition to the constantly increasing wages in certain periods. As we wish out employees to be leading a good life, we raised their wages on the basis of the inflation index," he said.

"Corporate Communications Manager of PT Holcim Indonesia Tbk, Budi Primawan said the price of the commodity has been set on standard procedures, namely taking into account energy cost of transportation and production.

"We have our responsibilities to the stakeholders and employees in making higher profits each year, while the percentage of profit is also set reasonably," he said.

The highest price hike, he said, was among things caused by an increase in the price of energy resources, which contributed 45-50 percent of production cost.