Indonesia’s cement industry 2015 and beyond: Randolph Wintgens, Wintgens Associates (Indonesia)

Filmed at Cemtech Asia 2015, 21-24 June, Grand Hyatt, Bangkok, Thailand


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I will talk to you about Indonesia this morning and at a glance you have 250 million people living there fourth largest country in the world, ENP per capita 3500 dollars, economic growth about 5% but going down, we have 12 cement producers, some state owned, some privately owned and the privately owned are mostly foreign. Production capacity is 76 million tonnes 81% utilization, cement consumption almost 60 million last year but it's cooling down, exports minimal, imports pretty high and unfortunately a multitude of green and brown field expansion projects both ongoing and planned and the surplus is certainly going to increase. This is just the glance as an appetizer of what you may want to hear in the next minutes. We will cover today demographics, economics, producers, markets, capacity, sales, distribution and outlook of that country.

250 million, fourth largest populated country, still relatively small population density but that's because the country is so big compared to Bangladesh which is much higher density but the country is much smaller. You have distances, 5100 kilometers from east to west and 1760 kilometers north to south, 34 provinces, 17,500 islands the largest islands being Sumatra and Java and Kalimantan the form of Borneo, Slavici the form of Silabese and then you have the malukus and Bali of course and Aryanjaya and Papua.

The economy basically it's a market based economy in which the government plays a significant role. There are 139 state owned companies including some cement companies such as Cement Indonesia, the largest cement producer as a matter of fact and smaller producers, Semen Baturaja in Sumatra. The government administers prices in several basic goods, fuel, rice, electricity but recently some interference in cement prices have started since early this year, I will get back to that in a short while. From 0% in 1999 which is quite amazing which was after the fall of the Suharto regime and the crisis of the late 90s, Indonesia had a growth rate of 0% and it then gradually went up and stabilized at about 6% until 2013.

But then since 2014 it gradually starts to slip down and it may even go below 5% in 2015. Recently the IMF and Wold Bank have both corrected their forecast to be below 5%. Now 5% may still be a nice growth rate for some countries but a country like Indonesia at the stage of development like Indonesia, 5% is much too low.

What is causing this slowing economic growth in Indonesia? Well, there are of course the global factors as usual and the domestic factors. The global ones are the sluggish global economic growth particularly caused by the slowdown of China which is a key trading partner and Indonesia used to be an export commodity based country, so since China is not buying so much as it used to be so that market collapsed for Indonesia and of course there's a looming monetary crisis or tightening in the US which leads to capital outflows, depreciation of the Rupiah, imported inflation and limited purchasing power of course for the people just illustrate how the Rupiah has changed since 2011, it moved from 9,022 Rupiah

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