The Indonesian government is encouraging investors to set up cement factories outside Java on the ground that demand for the commodity in the other islands is high but often not met, an Industry Ministry official said.
Unless there was new investment in the cement production sector in 2007-2008, Indonesia would face a cement shortage in 2011, Agus Tjahajana, the ministry`s secretary general, told the 10th international conference on cement (Intercem) here Wednesday.
"Assuming that demand for cement grows by eight per cent annually, Indonesia’s cement production capacity in 2011 will not grow beyond today`s figure, if investors do not set up new cement factories," he said.
The production capacity of the national cement industry in January-May 2007 reached 47Mt compared to 31Mt in a corresponding period in 2006.
Agus predicted demand for cement in the next few years would grow at a faster rate than in the January-May period of 2007 when the figure was 8.1 percent.
"In 2005, demand for cement grew by 5.2 per cent but due to the world oil price hikes, it only grew by 2.1 per cent in 2006. Demand for cement has already reached 8.1 per cent in the January-May period of this year," he said.
Data compiled by the Indonesian Cement Association (ASI) showed demand for cement in the first five months of this year stood at 12.83Mt, rising from 11.87Mt in 2006.
Agus said demand for cement outside Java would still rise in the future.
In 2006, demand for cement in Sumatra grew by 8.1 per cent, in Kalimantan 5.3 per cent, Sulawesi 10.9 percent, Maluku 8.6 per cent and Papua 8.6 per cent.
In Java, however, demand for cement was recorded at minus two per cent last year.