Rising RI industry figures to support first-quarter growth

The Jakarta Post, Jakarta

Indonesia's automotive and cement sectors have performed relatively well for 2007's first three months, a compilation of the latest industry figures show, which should help support higher first quarter growth on consumption and exports.

Data from the Association of Indonesian Automotive Manufacturers (Gaikindo) shows that sales of cars in the country reached 84,511 as of March, up 6 percent from the same period last year when they were at 79,412.

Similarly for the two-wheeler market, the Indonesian Motorcycle Industry Association (AISI) has so far recorded sales of 1.05 million units, a 20 percent increase on the 873,808 units sold during last year's first quarter.

The higher first quarter sales of motor vehicles has been good news for the rubber tire industry, which managed to record sales of 10.4 million rubber tires for the first three months to March, as compared to 9.78 million in the same period last year.

With most Indonesians taking up loans when purchasing cars and motorcycles, the current growth in the automotive sector could further help boost consumer loans of Indonesia's banking sector as well.

Bank lendings as of February has amounted to Rp 783.5 trillion (US$87 billion), from December's Rp 792.3 trillion.

With inflation having slowed recently to an on-year 6.29 percent by April, and the central bank having cut its key interest rate to 9 percent currently, all have helped revive consumption in the country, which still makes up over than 60 percent of Indonesia's total gross domestic product.

Aside from consumption, Indonesia has also been building up its economy of late on two other economic drivers: exports, amid strong global demand and prices for its main commodities, and direct investments.

The Central Statistics Agency (BPS) is scheduled to publish first quarter growth figures mid-May. Indonesia's economy grew by only 5.5 percent last year, slightly slower than 2005's 5.6 percent.

Compiled data for the cement industry shows an 8 percent increase in cement consumption to 7.6 million tons during the first three months to March, which should show rising construction and investments in the property sectors.

Cement exports also rose 40 percent to 700,000 tons.

Yet a downside of the cement industry may be in its sustainability in growth, with the fact that only state-owned Semen Gresik managed to book a 14 percent increase in first quarter profits to Rp 329.9 billion, and in a 12 percent growth in sales to 3.93 million tons.

Its competitors, Holcim and Indocement Tunggal, reported losses on currency fluctuations and rising production costs.

Meanwhile, in the agriculture sector, Indonesia saw production in two of its main commodities of crude palm oil (CPO) and rubber having slowed.

Indonesia's CPO production in January-March dropped 10 percent to 1.26 million tons per month, which Indonesian CPO Producers Association (Gapki) chairman Derom Bangun attributed to a normal climate cycle affecting production.

CPO exports, however, still managed to grow 8.2 percent from last year's first quarter.

The Indonesian Rubber Producers Association (Gapkindo) is also seeing slower production for the first quarter, although it is still upbeat of fulfilling a 6 percent full-year growth in exports from last year's 2.3 million tons, and a 10 percent domestic consumption rise from 355,000 tons.

Indonesia produced 2.6 million tons of rubber last year.
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