Sinaga stated that - contrary to earlier predictions - Indonesia's property sector has not shown a real improvement in 2016 and therefore ceramic sales are not able to pick up yet. Participants in the industry now hope to see a rebound in the second half of 2016 on the back of accelerated economic growth. Government-led infrastructure development, which is estimated to be the key ingredient to push Indonesia's economic growth up to 5.3 percent (y/y) in 2016, should give a boost to property development.

Given expectations of improving macroeconomic conditions, Asaki expects to see Indonesia's ceramic sales rising to around 11 percent to 400 million square meters in 2016. Installed ceramic production capacity of Indonesia now stands at 500 million square meters (this figure only includes the combined production capacity of Asaki members).

Meanwhile, Indonesia's ceramic producers fail to tap export markets due to high production costs. Although the Indonesian government announced to lower gas and electricity prices for labor-intensive industries in an effort to support these industries amid the economic slowdown (this was part of the government's third economic stimulus package, unveiled on 7 October 2015), energy prices remain high and causes Indonesian ceramic tiles to be more expensive compared to tiles produced in other nations (gas accounts for about 30 percent of total ceramic production costs). China remains the world's top ceramic producer.


Dhirendra Sheth |