Ceramic Industry of Indonesia Remains Under Pressure in 2017
The ceramic industry of Indonesia remains under pressure in 2017 due to low demand from the property sector and the high gas price. Therefore, there are reports that various ceramic producers have (temporarily) closed their factories and are now active as traders only. Elisa Sinaga, Chairman of the Indonesian Ceramic Industry Association (ASAKI), urges the government to lower gas prices immediately in order to support the nation's ceramic industry. Gas prices account for between 30 - 40 percent of Indonesian ceramic producers' total production costs.
Production costs in Indonesia's ceramic industry are high, implying output is less competitive compared to ceramic products in neighboring countries. High costs are primarily caused by the high price of gas. Whereas Singaporean ceramic producers pay USD $3 per mmbtu, Thai manufacturers pay USD $3 per mmbtu, and Indian manufacturers pay USD $5 per mmbtu, Indonesia's ceramic producers have to pay an average USD $9.1 per mmbtu for the ceramic production process.
In the government's third economic policy package (released on 7 October 2015) the Energy and Mineral Resources Ministry of Indonesia issued a regulation that lowers gas prices (for specific industries) "by a maximum of USD $2 per 1 mmbtu if gas prices are higher than USD $6 per mmbtu". This incentive is available to Indonesia's fertilizer, petrochemical, stainless steel, ceramic, glass, oleo-chemical and glove industries. However, only the fertilizer, steel and petrochemical industries can now enjoy cheap gas, while other industries are still waiting.
Indonesia's ceramic sales at the start of 2017 were below expectation as the nation's property sector remains bleak. Strangely, ceramic imports into Indonesia grew 27 percent in 2016, while domestic ceramic sales declined. This points at weak competitiveness of Indonesian-made ceramic. Sinaga expects domestic ceramic sales to remain stagnant in the first half of 2017 unless the property sector of Indonesia suddenly gets a boost or the government lowers the gas price.