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Cement Sales Are Likely to Exceed Expectations, Increase 15% in 2011
Jakarta Globe | December 19, 2011

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The country’s cement sales will probably increase 15 percent this year and exceed the original target of 10 percent on the back of low borrowing costs that have helped boost demand for property, chairman of Indonesia’s Cement Association said.

Urip Timuryono, chairman of association known as the ASI, said total sales reached 43 million tons in the January-November period.

“With an estimated 3.5 million and 4 million in December, that would lift total sales to 46 million this year,’’ Urip said. The country sold 40 million tons of cement last year, when the economy expanded by 6.1 percent.

The central bank kept its key interest rate in December at 6 percent, the lowest level since it was introduced in July 2005, after trimming it by a total of 75 basis points in October and November.

In a response to easing monetary policies, Urip said that several banks have reduced their mortgage lending rates to their customers, which pushed housing demand across the nation. Bank Tabungan Negara, a state lender that focus on home loans, reduced its mortgage rate by 50 basis points in early November.

“Rising property development caused cement sales to rise,’’ Urip said.

Urip said that cement sales totaled 4.4 million tons in November from 3.5 million tons in the same month a year earlier. That lifted total cement to 43 million tons as November this year.

Urip said cement sales would be flat next year, citing the impact of the global economic slowdown. Urip said that with the economic growth forecast at 6.5 percent next year, cement sales are forecast to increase by 6 percent.

The government has earmarked spending at Rp 3.35 trillion ($369 million) to finance the development of infrastructure projects such as toll roads, airports and seaports in the country over the next three years.

Analysts and economists in Jakarta said that the land acquisition law, which was passed by legislators last week, should have a positive impact on cement sales. The new law will enable the government to acquire land from the public for roads, seaports, airports, railways and dams. It will also give the government more power to buy property for oil, gas and geothermal facilities, as well as electricity plants.

“Indeed, there will be an impact on cement sales. We cannot give precise estimate,’’ Urip said.

Semen Gresik, the nation’s biggest cement maker, rose 4.8 percent to Rp 10, 850 on the Indonesia Stock Exchange on Monday.