Cement Firm Eyes Huge Burma Venture

By Jakarta Globe 31 August 2012

Indonesia’s biggest cement maker has set aside US $300 million for plans to expand its business to Burma, Cambodia and Vietnam, the company’s chief has said.

“Expansion overseas is still in the process,” said Dwi Soetjipto, the president director of Semen Gresik, in which the Indonesian government controls a 51 percent stake.

Earlier this month, Dwi signaled that the company was looking at acquiring stakes in cement makers in Malaysia, Burma, Vietnam and Thailand as it seeks to expand its reach in the region. He gave no indication of the size of the investment at that time.

But Dwi told Investor Daily last week that the company is still seeking partners as well as making valuations of investment opportunities and acquisitions in the Southeast Asian nations.

“Hopefully, the decision will come out in November,” he said.

Apart from its planned overseas investment forays, expansion at home is also ongoing. Gresik is currently building a cement plant in Padang, West Sumatra, and one in Tuban, East Java.

Semen Gresik booked a 12 percent rise in net income in the first six months of this year as it benefited from increasing cement sales in Indonesia, a product of the nation’s property and construction boom.

Net income rose to Rp 2.1 trillion ($220 million) in the January-June period, from Rp 1.87 trillion in the same six months last year, and revenue increased 14 percent to Rp 8.66 trillion, the company announced last week.

Gresik expects to produce 23 million tons of cement this year and 24-25 million tons in 2013.

Seeking a greater international profile, the company will change its name to Semen Indonesia. That change must be approved by shareholders, which could happen in October or November.

Total cement consumption nationally is expected to reach 52 million tons this year, up from 48 million last year. Production is forecast at 60 million tons this year, from 52 million tons in 2011.

The nation’s $813 billion economy, which expanded by 6.5 percent last year, is forecast to maintain that pace this year. Gresik’s move follows another Indonesian state-controlled company that is also looking to expand overseas.

The biggest telecommunication company in Indonesia has announced its intention to expand business into East Timor. Telkom has set aside up to $50 million to support the plan. It will cooperate with the majority Timorese government-owned Timor Telecom, the leading player in that nation’s telecommunications sector.

The president director of Telkom, Arief Yahya, said the neighboring nation of 1.2 million people had a lightly developed telecommunications sector, an appealing prospect for the company. Telkom also has its eye on Burma, Arief has said, as telecommunications penetration there stands at just 5 percent of the country’s 54 million people.

“We don’t know how much the investment is because it is only in early study. We will observe the political conditions and others,” he said.

Telkom is expanding its business abroad amid stiff competition in an increasingly saturated domestic market.