Indonesian lawmakers call on govt to protect cement industry

Indonesian lawmakers call on govt to protect cement industry
Published: 01 December 2004

The government should protect the domestic cement industry from foreign companies’ control which has been indicated as part of an international cement cartel, legislators said here Tuesday.    "I am not against foreign companies, but above the cement industry there is an international cartel that could lower and increase cement prices," Didik Rachbini of the House’ Commission on trade, industry and investment said at a working meeting with Industry Minister Andung A Nitimihardja.    The legislator expressed concern that such move has been part of an interational cartel’s attempt to keep local cement price high, ignoring the fact that the commodity is badly needed for the country’s development.  

Following the economic crisis in Indonesia, some private cement industries in the country which have high production capacity and market shares such as Indocement and Semen Cibinong were controlled by some foreign companies.   The two companies have a market share of 34 percent and 14 percent respectively with foreign investors controlling some 61 per cent and 76 per cent of its shares.    Didik reiterated, the government should prevent foreign control over state-run cement companies. "Now, we have to lobby, to prevent Cemex (from controlling Semen Gresik shares)."   Currently, Cemex controls 25 percent of Semen Gresik shares which has two affiliates, Semen Padang and Semen Tonasa.  

Meanwhile, Industry Minister Andung A Nitimihardja said, demand for cement in the domestic market has grown 4-5 percent annually, and it is expected to grow by 7 percent in 2004.   National industry production capacity has reached 47.4Mt, but production only reached 36Mt of which 29Mt were for the domestic market and four million tons for exports.   Andung said, under the program to control exports, local cement supply is expected to meet demand in the next five years.  "While under the long term program, we need to build new factories especially outside Java," Andung said.