Indonesia: turning a corner
For several years, Indonesia’s cement industry has experienced stagnant domestic demand, overcapacity and pricing pressure – problems that have been exacerbated by COVID-19. However, while uncertainty remains, government infrastructure spending, energy policy and housing market growth offer hope of improvement. By George Woods, Jitin Sethi and Bhushan Bhutada, LEK Consulting.
The Indonesian cement industry is expected to receive welcome support from the government against
a backdrop of central bank rate uncertainty at home and geopolitical issues elsewhere
Indonesia is one of the top five cement producers globally, with a total production volume of ~77Mt in 2021. However, since 2015 the domestic cement industry has been plagued by overcapacity. Consistent additions by new entrants have led to significant oversupply, with utilisation rates falling from 84 per cent in 2014 to ~68 per cent in 2019. The share of domestic market leader Semen Indonesia (excluding Solusi Bangun Indonesia –SBI) at home has declined from 44 per cent in 2014 to 38 per cent in 2019.
