C&CA on the road to boost cement sales, Malaysia

C&CA on the road to boost cement sales, Malaysia
Published: 23 October 2006

The Cement & Concrete Association of Malaysia (C&CA) is stepping up efforts to expand the concrete road business.

It aims to boost demand for cement and open up opportunities to develop the industry further.

However, the association could be facing an uphill task. The last major concrete road built in the country was in the late 1980s. 

Nevertheless, C&CA executive director Grace Okuda remains optimistic that concrete roads could take off in Malaysia.

According to Okuda, there is currently only one choice – asphalt roads – with no option to switch to concrete, as there are inadequate resources in terms of machinery, manpower and finances in the country to do so.

“The concrete road business is still a fledgling industry which we need to nurture. The Government can help by providing sufficient volume to jumpstart the industry.

“For example, nobody will want to invest in the industry if the Government plans to build only 10km of concrete roads in 10 years,” she said.

Okuda would also like to see the Government commit to a policy and offer incentives and initiatives to encourage the use of concrete roads.

“Building concrete roads will help in research and development and enable us to Malaysianise concrete technology according to our needs. It will also enable us to compare advantages and disadvantages of asphalt and concrete roads.

“Most of the complaints about concrete roads that we have received so far are about the noise level, which can be improved with new technology,” she said. 

Technical coordinator Hooi Wing Chuen noted that building concrete roads could be a viable and economical option, especially with the cost of bitumen (a component to produce asphalt) hovering at RM1,300 per tonne currently compared with RM450 in 1995.

“The initial cost of building a concrete road was previously higher than that for an asphalt road. Due to the high oil prices today, concrete now offers significant savings on initial cost at the highway (heavy duty) segment of the market. 

“Concrete roads also have lower maintenance costs, as they are more durable and can last 20 to 40 years with relatively no maintenance,” he said.

Hooi said concrete pavements would result in fuel cost savings of 10% to 20% for lorries and improve road safety due to better visibility (concrete is white) and skid resistance. 

He said that as a rule of thumb, concrete roads would be suitable in areas with many heavy vehicles and high traffic volume while asphalt roads would be ideal for areas with lighter traffic and as temporary roads.

C&CA’s figures show that the cement industry currently has a grinding capacity of 28.3Mt and clinker production capacity of 17.8Mt since 2001. 

Demand, however, was 15.6 million tonnes last year (1.84% lower than 2004) with only marginal growth expected this year.

In addition to low cement demand, the industry has also been plagued with escalating costs, namely for fuel, electricity and freight.

“As at end-2004, integrated plants in Peninsular Malaysia recorded a 31% increase in costs and grinding plants in east Malaysia 17%.

“This does not include the fuel price hikes in 2005 and 2006, the 14% electricity increase for the industry and the recent rail freight surcharge of 10%, which took effect on Sept 1,” Okuda said, adding that a cement price review was long overdue.

The last cement price increase was in 1995, with a 10% hike across the board. The average price of cement in Kuala Lumpur is RM198 per tonne. 

In view of that, the association has made a proposal to the Government to review the price of cement, a price controlled item, in March last year.

“We have had several rounds of meetings, but the Government is still looking at the proposal,” Okuda said.

She added that there had been no new plants and expansion in the cement industry since 1998 and a price review might encourage players to look at reinvestment and expansion.

“If the industry does not expand, the amount of cement available may not commensurate with the country’s future economic growth, especially now that the Ninth Malaysia Plan (9MP) is starting to take effect. We expect the 9MP to boost demand for cement next year, but it all depends on how fast the government machinery works,” she said.