Semen Indonesia confirms interest in ASEAN expansion

In March, we reported that PT Semen Indonesia plans to build a new cement plant in Myanmar, at a cost of US$200 million. Now, Semen Indonesia Chief Executive Dwi Soetjipto has told press that the company needed to expand in Southeast Asia to ensure it doesn’t get ‘squeezed’ out of the market. In an interview with Reuters, Soetjipto compared the company’s business strategy to a chess game, in which “we put out bishop in Vietnam and our knight in Myanmar”.

PT Semen Indonesia has a 44% share of the domestic market, a majority stake in Thang Long Cement in Vietnam, and now plans to extend its reach to Myanmar, where the economy is expected to grow by more than 6% this year. Semen Indonesia is in talks with the government to build a plant of between 600 000 t and 1 million t capacity. Myanmar currently imports approximately half of its 6 million t demand, and these imports come from the likes of Thailand and Vietnam, which currently has a massive supply surplus.

In total, PT Semen Indonesia expects to produce 29 million t this year, a 20% rise on last year’s total. In addition to planned new capacity in North Sumatra and potentially also in the east of Indonesia, the company expects to acquire a majority stake in PT Semen Baturaja later this year. Cement demand in Indonesia was more than 60 million t last year and this is expected to increase by 8 – 10 % this year, and by around 7% over the next five years.

Semen Indonesia is not alone in setting its sights on Myanmar. Last year, we reported that Thailand’s Siam Cement intends to establish a new cement plant in the Tanintharyi region.

Edited from various sources by Katherine Guenioui.

Read the article online at: https://www.worldcement.com/asia-pacific-rim/01052013/semen_indonesia_talks_business_strategy_964/