Govt encouraging investors to build cement factories outside Java

Jakarta (ANTARA News) - The government is encouraging investors to set up cement factories outside Java on the ground that demand for the commodity in the other islands is high but often not met, an Industry Ministry official said.

Unless there was new investment in the cement production sector in 2007-2008, Indonesia would face a cement shortage in 2011, Agus Tjahajana, the ministry`s secretary general, told the 10th international conference on cement (Intercem) here Wednesday.

"Assuming that demand for cement grows by 8 percent annually, Indonesia`s cement production capacity in 2011 will not grow beyond today`s figure, if investors do not set up new cement factories," he said.

The production capacity of the national cement industry in January-May 2007 reached 47 million tons compared to 31 million tons in a corresponding period in 2006.

Agus predicted demand for cement in the next few years would grow at a faster rate than in the January-May period of 2007 when the figure was 8.1 percent.

"In 2005, demand for cement grew by 5.2 percent but due to the world oil price hikes, it only grew by 2.1 percent in 2006. Demand for cement has already reached 8.1 percent in the January-May period of this year," he said.

Data compiled by the Indonesian Cement Association (ASI) showed demand for cement in the first five months of this year stood at 12.83 million tons, rising from 11.87 million tons in 2006.

Agus said demand for cement outside Java would still rise in the future.

In 2006, demand for cement in Sumatra grew by 8.1 percent, in Kalimantan 5.3 percent, Sulawesi 10.9 percent, Maluku 8.6 percent and Papua 8.6 percent.

In Java, however, demand for cement was recorded at minus 2 percent last year.

Indonesia has nine cement factories but most of them are located in Java.