Production of ceramics in Indonesia can grow due to the purchase of new production machinery by Arwana Citramulia, one of the big four ceramic manufacturers in Indonesia. The company, which produces low-cost ceramic tiles to serve the medium-low segment market, bought USD $9 million of ceramic manufacturing equipment from the Italian Sacmi Group. This equipment will be used in Arwana Citramulia's fifth plant, which is currently under construction, located in Mojokerto (East Java). The plant will be built in three stages. The first stage, requiring IDR 300 billion worth of investments, will add 8 million m2 to the company's production capacity. This first stage should be completed and ready for operation in the second half of 2015. Arwana Citramulia seeks aggressive expansion through the establishment of new production facilities. By 2020, the company targets a total ceramic production capacity of 87 million m2, from a current 49.7 million m2.

The purchase of new production equipment is needed as production capacity of sanitary ceramics in Indonesia has reached its maximum. The production of tableware ceramics, on the other hand, has not been operating at full capacity. Sinaga said that the utilization of the country's tableware ceramics' production capacity is currently at 95 percent and has therefore still room for growth without needing capital investments. Particularly production facilities located in East Java can grow due to sufficient gas supplies. In the western and central part of Java, sufficient gas supplies form a problem. Gas is an important 'ingredient' in the ceramic production process (costs of gas account for about 30 percent of total ceramic production costs in Indonesia).

Per capita ceramic consumption is still low in Indonesia at 1.65 m2, considerably below Thailand (4 m2) and Malaysia (3 m2). This implies that there remains ample room for growth, particularly as the middle class segment of Indonesia is expanding rapidly. Indonesia is the world's sixth largest ceramic producer after China, Italy, Spain, Turkey and Brazil. There are 35 Indonesian ceramic manufacturers with a total of 80 factories, providing employment opportunities to about 200,000 people.

Indonesian Ceramic Industry 2009-2014:

  2011   2012   2013   2014
Revenue (IDR trillion)     13     17     17     24     30     36¹
Growth YoY (%)    -20     30      0     41     25     20¹

¹ indicates a forecast
Source: ASAKI