Indonesia growth to slow compared to high 2011 base

Indonesia growth to slow compared to high 2011 base
04 January 2012

The growth of cement sales in the domestic market will probably slow in 2012 despite the government’s plans to build many infrastructure projects during the year.

Indonesian Cement Association (ASI) chairman Urip Timuryono said in Jakarta on Tuesday that cement sales would rise by only six per cent to 49.82Mt this year after recording a 17.5 per cent increase to about 47Mt in 2011. 

“Cement consumption will only rise by six percent this year because high growth occurred last year,” he said.

Urip said that as with last year, cement consumption would likely be driven by the property sector, which would contribute around 70 percent to total sales. A number of planned infrastructure projects to be carried out as part of the Master Plan for the Acceleration and Expansion of Indonesian Economic Growth (MP3EI), would not significantly push up cement consumption because they would only constitute 30 per cent of cement sales. 

“The property sector is expected to see sub 10 per cent growth due to the impact of the global economic slowdown, possibly affecting the inflow of investment into the country,” he explained, adding however that growth could possibly be higher if local banks cut their lending rates in line with Bank Indonesia’s recent cut in its benchmark rate.

According to Urip, property projects would be mostly concentrated in Java, while infrastructure projects, such as roads and bridges would be more dispersed in Java and other islands. 

“Java will still dominate cement use. Cement consumption outside Java may rise by 1-2 per cent this year,” he said.

Out of the 44.5Mt of cement sold throughout the January-November period last year, Java accounted for around 57 per cent, according to the association’s data. 

Urip said that cement production would rise by 10 per cent to 60Mt this year as there would be additional output from several cement producers that had increased their production capacity, such as state owned cement maker PT Semen Gresik and its subsidiary PT Semen Tonasa, which each added 2.5Mt of capacity. 

Published under Cement News