Cement sales in Indonesia are expected to rise as the new Indonesian government aims to ramp up infrastructure development while - in the long term - Indonesian banks will lower interest rates. Lower interest rates give rise to enhanced property development in Southeast Asia’s largest economy. The country’s three leading cement producers are expected to benefit significantly from these developments. These companies are Semen Indonesia, Indocement Tunggal Prakarsa, and Holcim Indonesia.

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Cement sales in Indonesia surged 21 percent month-to-month (m/m) to 5.6 million ton in September 2014 from 4.6 million ton in the preceding month. Widodo Santoso, Chairman of the Indonesian Cement Association (ASI), said that the increase in Indonesian cement sales was supported by the start of a number of central and regional government infrastructure projects. Santoso also detected an increase in development of property projects. Infrastructure and property are the sectors that absorb most cement.

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On 14 September 2014, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website in the last seven days. Most of the topics involve economic topics such Indonesia’s fuel subsidies, economic growth in 2015, monetary policy of Bank Indonesia, the Anas Urbaningrum corruption case, emerging Indonesian companies on a global scale, and more.

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Penjualan semen di Indonesia turun 25 persen menjadi 3.7 juta ton pada Juli 2014 dari 5 juta ton pada Juli 2013. Penurunan tajam ini disebabkan oleh libur Lebaran (atau Idul Fitri di mana umat Islam merayakan berakhir bulan puasa), waktu banyak kegiatan usaha bisnis dihentikan sementara, serta pemilu presiden yang diadakan juga pada bulan Juli 2014. Melambatnya penjualan semen juga disebabkan oleh menurunnya pertumbuhan ekonomi (5.12 persen yoy pada kwartal kedua 2014). Penjualan semen merupakan indikator utama kegiatan konstruksi (pembangunan infrastruktur dan properti).

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On 13 July 2014, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website in the last seven days. Most of the topics involve political and economic topics such as the presidential election, an analysis of the interest rate environment, car sales, IPOs on the Indonesia Stock Exchange, a tender announcement, and more.

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Bank Indonesia (Indonesia's central bank) has expressed that it will support slowing credit growth in the country's banking sector next year in order to foster a more stable financial environment amid a complex external and internal context. In recent years, credit growth in Indonesia has grown over 20 percent annually, while in 2013 it is expected to slow to between 18 and 20 percent amid a tighter policy regime. In 2014, Bank Indonesia targets credit growth between 15 to 17 percent. As a result banks will be more cautious in their lending approach.

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After experiencing slowing growth in recent months, Indonesian cement sales in October 2013 increased 7.9 percent (year-on-year) to 5.58 million metric tons according to data from the Indonesia Cement Association (ASI). As such, cement sales rebounded from the 5.3 percent growth (yoy) in the previous month. The October growth rate was mainly caused by increased cement demand from islands other than Java. In particular, demand from Sumatra rose significantly. Indonesia's second most populous island bought 1.15 million tons of cement.

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Although the combined performance of the four listed Indonesian cement companies in the first six months of 2013 is good with net profit rising 13.7 percent from the same period in 2012, the individual companies posted mixed results. Net profit of Semen Indonesia, Indonesia's largest cement producer, rose 22.9 percent, while net profit of Indocement Tunggal Prakarsa, the country's second-largest cement producer, rose 11.8 percent. The other two cement producers, Holcim Indonesia and Semen Baturaja, posted a decline in net profit.

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Holcim Indonesia, the third largest cement producer in Indonesia, is a cement-based building materials and services provider with operations in two countries, Indonesia and Malaysia. The company currently holds a market share of around 15 to 16 percent in Indonesia in terms of cement production. Holcim and its subsidiaries have a combined cement production capacity of 9.1 million tons in Indonesia. The company, part of the Swiss-based Holcim Group, aims to expand production capacity with its two new Tuban plants.

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Semen Indonesia, formerly known as Semen Gresik, is Indonesia's largest cement producer. The company, which is one of the few Indonesian companies that has spread its wings abroad for business expansion, forms the holding company of three large cement producers: Semen Gresik (East Java), Semen Padang (West Sumatra) and Semen Tonasa (South Sulawesi). Although the company lost a couple of percentage points in terms of market share, it still dominates Indonesia's lucrative cement industry.

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Indocement Tunggal Prakarsa (INTP), Indonesia's second-largest cement producer, is planning to invest between US $260 and $320 for the establishment of three new cement factories. One of these factories - with a production capacity of 4.4 million ton per year - will be built on brownfield land (in Citeureup, West Java), while the other two will be built on greenfield land and will have a combined production capacity of about five million ton annually.

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Both Indonesia's cement production and cement consumption have risen rapidly in recent years. As the country has been showing solid economic growth for a decade - and is forecast to continue this growth -, property and infrastructure projects have grown in number accordingly, thus increasing demand for building materials such as cement. Moreover, the government is committed to enhance the country's much-needed infrastructure development.

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