Without the negative influence of the legislative election, cement demand is expected to grow again in May 2014. However, on 9 July Indonesia will hold its presidential election and this might impact again on cement sales.

Whereas cement sales fell in Sumatra, Kalimantan, Sulawesi, Bali and Nusa Tenggara in April, sales grew in the more eastern-located island as well as on Java (Indonesia’s most populous island and the economic and political center of Southeast Asia's largest economy).

According to the ASI, higher electricity prices (caused by the central government’s intention to reduce energy subsidies) per May 2014 increases production costs by three to five percent for cement producers and will require them to optimize efficiency. The country’s cement industry requested for fiscal incentives - in the form of a tax holiday for imports of Japanese machinery and equipment - to compensate for the higher electricity charges. This proposal is currently being studied by the Indonesian Ministry of Industry. This ministry notes that electricity costs account for about 15 to 18 percent of cement producers’ total production costs. The new electricity prices, which are raised by 35 to 64 percent, are expected to add 10 percent to production costs. As such, the ministry’s calculation of new production costs is higher than that of the ASI. The government expects to save IDR 5.6 trillion by raising electricity prices.

Indonesian Cement Sales 2008-2014:

 Year    Cement Sales
   YoY Growth
 2014¹       18.6 million         +2.8%
 2013        58 million         +5.6%
 2012        55 million        +14.6%
 2011        48 million        +20.0%
 2010        40 million         +4.2%
 2009       38.4 million         +1.1%
 2008        38 million             -

¹ January to April 2014 only
Source: Indonesian Cement Association (ASI)