Indonesia continues to solidify its position as one of the largest cement producers in Southeast Asia. Amid rapid industry growth, innovative steps towards sustainability and decarbonization have become a primary focus. These measures impact the cement industry and the national economy.
The cement industry in Indonesia also demonstrates its strength and significant role in supporting national economic growth. ANTARA FOTO/Arnas Padda
With a total production capacity of 120 million tons per year, Indonesia has become one of the largest cement producers in Southeast Asia. The significant growth in cement production is driven by massive infrastructure development worldwide. According to The Business Research Company, projections estimate that the industry will reach US$410.86 billion by 2024.
The cement industry in Indonesia demonstrates its strength and significant role in supporting national economic growth. According to data from the Indonesian Cement Association (ASI), the domestic cement market grew by 3.6%, with a slight increase of 0.1% in the bagged cement market and a significant rise of 13.3% in the bulk cement market.
However, despite high demand, the large production capacity of 16 cement companies has led to oversupply. In 2023, national cement demand reached 66.8 million tons, while Indonesia's cement industry also exported 1.4 million tons of cement and 9.7 million tons of clinker. The current utilization of the cement industry stands at around 58%, reflecting significant overcapacity.
Proposal to be Included in Negative Investment List
In response to the excess production capacity, the Industry Ministry has proposed to the Coordinating Ministry for Economic Affairs that new investments in the cement industry be included in the negative investment list. The goal is to regulate technical and non-technical cement plant development provisions to prevent further overcapacity.
The Investment Ministry/Investment Coordinating Board has already regulated this through the online single submission (OSS) system, except for Papua, West Papua, Maluku, and North Maluku regions. The Industry Ministry also advocates for optimizing the use of domestic cement to support government and private projects, thereby boosting domestic cement consumption, which serves as an indicator of national economic growth.
Decarbonization and Sustainability
The Industry Ministry is driving cement producers to implement sustainable improvements to create a conducive business climate and enhance competitiveness. One initiative is to promote industrial decarbonization and produce environmentally friendly cement products to achieve net-zero emissions (NZE) in the future.
A roadmap for decarbonizing the cement industry has been developed to achieve net-zero emissions (NZE) by 2050. The strategic focus includes reducing the clinker-to-cement ratio, transitioning to alternative fuels, improving energy efficiency, and developing innovative technologies. To strengthen the legitimacy of this roadmap, the Industry Ministry plans to elevate it to a Ministerial Regulation, providing a framework for cement producers in Indonesia to develop their respective decarbonization roadmaps.
“We are committed to fulfilling our climate change and sustainability commitments by drafting regulations related to decarbonizing the industry to achieve net zero emissions by 2050,” said Putu Nadi Astuti, Director of Cement, Ceramics, and Non-Metallic Mineral Processing at the Industry Ministry.
With these steps, the Indonesian cement industry is expected to meet domestic demands and compete in the global market with more environmentally friendly and sustainable products.
Source: Portal Informasi Indonesia
