The Indonesian government’s land acquisition bill in December is expected to speed up land purchases for public infrastructure projects, boosting cement demand according analysts at Nomura Indonesia.
The analysts told CNBC that this bodes well for local cement manufacturers who are currently undertaking capacity expansion projects. “"Given that the Indonesia cement industry is running closer to 90 percent capacity utilization at the moment, this will be good for those who can add capacity at the right time," Willianto Ie, Head of Equity Research at Nomura Indonesia, said.
Infrastructure bottlenecks have long been viewed as one of the key factors holding back Indonesia's economic growth and Ie says the new bill will accelerate public projects.
"The key problem for Indonesia is that there is not enough infrastructure being built in the past decade and that put Indonesia at the risk of higher economic costs in the sense of the poor logistic systems," Ie added.
Analysts expect cement sales to hit 53Mt in 2012 up 11 percent from last year, on low interest rates, strong GDP growth and because of the land acquisition bill.