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Jakarta Post

Semen Indonesia to maintain focus on domestic market

  • Indra Harsaputra

    The Jakarta Post

Surabaya   /   Fri, January 8, 2016   /  05:25 pm

Publicly listed state-owned cement producer PT Semen Indonesia will maintain its focus on the domestic market this year despite experiencing sluggish local cement sales in 2015.

Semen Indonesia president director Suparni admitted that the domestic cement market had stayed cool throughout last year, leading to a minor drop in the firm'€™s sales.

'€œHowever, we will keep working in the domestic market,'€ Suparni said, adding that several government infrastructure construction projects begun last year offered hope that cement demand would increase over the course of the coming year.

The Public Works and Public Housing Ministry conducted early bidding '€” as early as August last year '€” on project tenders to speed up spending and infrastructure development. Following the bidding, the ministry on Wednesday signed agreements on 644 infrastructure project packages worth Rp 8.81 trillion (US$632.4 million), with projects worth a further Rp 9.47 trillion to be signed by the end of this month.

Suparni expressed hope that his firm could boost sales by 5 percent to 6 percent this year.

'€œWe pushed exports to ASEAN countries and even Bangladesh last year to a figure that reached 500,000 tons as domestic purchasing power began plummeting in February,'€ he said.

Data from the Indonesian Cement Association (ASI) show that national cement consumption grew 4.7 percent year-on-year (yoy) in November last year to 6.1 million tons, bringing total cement consumption from January to November to 54.9 million tons, a 0.8 percent increase from the corresponding period in 2014.

The data will shore up optimism in an industry that contracted in 2015, as Indonesia'€™s economy grows at its slowest pace in nearly six years.

Cement has long been regarded as a key indicator of domestic consumption, which drives more than half of Southeast Asia'€™s largest economy.

Semen Indonesia corporate secretary Agung Wiharto said earlier that his company was banking on the Public Works and Public Housing Ministry'€™s move to conduct early bidding on project tenders to speed up spending and infrastructure development.

'€œThese projects will also boost cement consumption,'€ Agung said.

The ministry started bidding as early as August last year in order to expedite spending that only started around June last year so that by January 6 to 10 percent of its budget would be disbursed.

According to Semen Indonesia'€™s sales data, the nation'€™s largest cement producer saw its sales fall by 0.3 percent yoy to 23.99 million tons from January to November last year. Meanwhile, sales in November were booked at 2.64 million tons or 3.8 percent down month-on-month from 2.75 million tons in October, which saw a 10.3 percent jump in sales compared with September.

Semen Indonesia marketing director Amat Pria Darma meanwhile said that the company'€™s national market share counted for between 44 percent and 17 percent in terms of the export market.

'€œWe will not leave the existing export market share, we will just switch production allocation,'€ he said, citing as an example subsidiary Semen Tonasa, which would keep fulfilling export demands, while domestic demand would be fulfilled with imports from Semen Thanglong, Semen Indonesia'€™s Vietnam-based subsidiary.

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