JAKARTA (TheInsiderStories) – Indonesian government targeting cement and clinker exports to reach 7 million tons in 2019. The amount up 24 percent compared to 2018 with total amount 5.64 million tons, according to industry ministry’ official statement on Monday (06/10).

The performance of the cement industry is projected to be more attractive in 2019 compared to 2018. This is due to government efforts to continue to create a conducive business climate in the country.

Director at the ministry, Adie Rochmanto is optimistic the utilization of the cement industry will be better this year from last year above 75 percent. This utilization takes into account the growing domestic and export markets.

Previously, Minister of Industry Airlangga Hartarto stressed that his party also continued to increase cement consumption in the domestic market through several ongoing project opportunities, especially those announced by the government. For an example, the development of infrastructure, property and manufacturing sectors.

Another step, the ministry directs the domestic grinding plant using clinker raw materials, which are expected to absorb from local production. This effort is to reduce imports of similar products.

Hartato explained, these policies are a form of the government’ commitment to maintaining a conducive business climate so that the national cement industry can grow and develop. Currently, the domestic cement market is an oversupply.

The production capacity of the cement industry is integrated with the country reaching 109.9 million tons per year, while consumption in 2018 is around 69.6 million tons.

“The domestic cement industry is in an overcapacity condition. In the past, the growth of cement demand was indeed high, so investors competed to make factories and investments, but in the course of their growth, they were not as big as expected so that currently there is over capacity,” he adds.

The ministry asks domestic players to continue to build an innovation ecosystem to enhance competitive advantage amid increasingly fierce competition both at regional and international levels. Such innovation can be an advantage for the company because it is more efficient, especially in overcoming the excess national cement production capacity.

According to Hartato, the development of strategic industries such as cement plants needs to be maintained because they bring multiple effects to the regional and national economies, including the absorption of labor and small-scale cement-based industrial growth that can be developed.

Previously, Indonesian Cement Asssociation reported, national cement sales in 2018 reached 75.2 million tons, up 8.6 percent compared to the previous year. A total of 69.51 million tons are sales in the domestic market and 5.7 million tons from the export market.

Reportedly, the national cement exports surged 97 percent in 2018 to 5.7 million tons compared to the previous year of 2.9 million tons. This increase supported by the utilization of domestic cement factories which have an overcapacity of up to 30 percent.

In 2019, the association targets cement exports to reach 7 million tons, up 23 percent from the 2018 results. This export still is a national industry choice to reduce the overcapacity that continues this year.

The association estimates that domestic cement sales growth will only be around 3-4 percent supported by infrastructure and national strategic projects, rural development, and a million house programs from the government.

Meanwhile, state-owned cement producer, PT Semen Indonesia Tbk (IDX: SMGR) reported until the end of last year was able to sell 33.6 million tons or up 7 percent compared to 2017.

The growth of the company’ cement sales reportedly was sustained by higher export sales but the domestic cement sales only grew 2 percent to 27.8 million tons.

Written by Willy Matrona, Email: theinsiderstories@gmail.com