Indonesia 2016 sales forecast to accelerate

The Indonesia Cement Association expects cement sales to rise by almost five per cent this year to 64.5Mt from an estimated 61.5Mt in 2015, driven by a push for government-led infrastructure development across the country.

In 1H15 the Indonesian government failed to spend a significant portion of the allocated budgets due to budgetary and organisational reforms. After the disappointing start, an increasing number of government-led infrastructure projects took off in the second half of the year.

Moreover, amid the economic slowdown, Bank Indonesia's high interest rate environment and
weakening purchasing power in the private sector also led to the cancellation or delays to the start of property and infrastructure projects. The good news is that GDP growth is expected to have bottomed in 2015 (at +4.7 per cent YoY) in 2015 and an acceleration to +5.3 per cent is being forecast for this year.
ASI Chairman, Widodo Santoso, said that enhanced execution of government infrastructure development spending was visible in Indonesian cement sales in the later months of 2015, with cement sales rising in September, October and November 2015.

In the January-Nov 2015 period, Indonesian cement sales stood at 55.9Mt, up 2.1 per cent
YoY. Although this growth figure was modest, the rising trends seen in the second half of the year are being viewed as a positive sign.

However, Mr Santoso, cautioned that a delay in government spending poses downside risks to the 2016 sales projections.