ASI hopes infrastructure development and housing will boost Feb sales

Following the positive start to 2016, the Indonesia Cement Association (ASI) hopes to see an increase in February cement sales on the back of the government’s 1m-unit housing programme and infrastructure development in villages (for which the government allocated IDR47trn in the 2016 State Budget).

Earlier this week, Indonesian Finance Minister, Bambang Brodjonegoro, said the government's spending on infrastructure projects in the first month of the year had increased 15 times to IDR1.5trn (approximately US$112m) compared to January 2015.

The start of infrastructure projects in Indonesia – ranging from roads, bridges, power plants, smelters, and public housing – has already managed to boost cement consumption in January 2016.

Widodo Santoso, chairman of the ASI, added that Indonesia will see around 16.5Mta of cement capacity being added to the country's total production capacity in 2016. With cement demand this year expected at 66Mt, it means that capacity exceeds domestic cement demand. Santoso hopes that Indonesian cement producers can increasingly focus on the export of cement to countries such as Bangladesh, Africa, Australia, the Philippines, Timor Leste, Sri Lanka and the Middle East.

Enny Sri Hartati, Director of the Institute for Development of Economics (INDEF), said the current cement over-capacity in Indonesia is the result of a delay in infrastructure development. An example of an ambitious government-led project that has not achieved its initial target is the 1m-unit housing programme (which involves public housing for the lower-income segments). Last year only 400,000 houses were completed. Although this programme has supported domestic cement consumption in Indonesia, it should have performed better according to INDEF.