Indonesia to have sufficient cement supply until 2010

Indonesia will have a sufficient supply of cement until 2010 as its production capacity more than matches local demand, Director General of Chemical and Forestry Industry at the Industry and Trade Ministry Benny Wahjudi said. "In 2010 cement production is expected to reach 52Mt. Currently, the total capacity of the national cement industry is around 48Mt annually while demand is only 30Mt with the industry using only 65 per cent of its capacity," Benny said.

According to Benny, demand for cement would increase in accordance with economic growth, and in 2006 the demand was expected to increase by 2.5 per cent or some 3Mt.  However, Benny said, the increased demand would not lead to cement scarcity as a number of cement companies were planning to increase their production capacity which would prevent the country from suffering any cement scarcity at least from 2007 to 2010.

Currently, some 30 domestic and foreign investors were seeking licenses to build cement factories in Indonesia, Benny said. "They submitted their proposals in the 1990s before the crisis hit Indonesia."  Benny was unable to say whether or not the licenses for investment had expired because the authority to issue them was in the hands of the Investment Coordinating Board (BKPM).

He said investment in the cement industry was somewhat being constrained because of difficulties in finding proper locations and the relative lack of infrastructure facilities such as ports and roads.  "Most investors prefer to locate their projets in Java island for the location (of the industry). But it is becoming incresingly difficult to find a place in Java where the operation of an industrial plant will not disturb the environment and affect the local people’s lives." he said.  In addition, investors preferred locations which already had road and ports facilities for the distribution of their products as well as the supply of raw materials, Benny said.