PT Indocement Tunggal Prakarsa Tbk (INTP) projects domestic cement demand growth this year will be around 4-5%.

"We estimate that bulk cement sales will be higher, especially in the second half of this year," Indocement said in its public expose document published on the Indonesia Stock Exchange on Thursday (18/3).

Indocement management forecast for a significant increase in the second half of this year on the back of the infrastructure budget has increased by 38%. The Ministry of Work gets the most significant portion of the 2021 State Budget, around Rp.149.8 trillion, and it claims to have absorbed up to 7% in early February.

More supports will come from the Indonesia Investment Authority's formation to attract more investment for infrastructure projects. The multiplier effect of infrastructure projects will encourage industrial estates and factories and the Job Creation Law, which is expected to attract more investment in the second semester of 2021.

Regarding cement price, management assumes that overall it is expected to remain the same, despite the recent increase in coal prices, including the latest decision by the Indonesian Business Competition Commission (KPPU) to a cement player.

However, competition in East Java for second-tier brands needs to be closely monitored, and by mid-year, new players in Central Java will begin to enter the market.

The ODOL (Over Dimension & Over Loading) policy will significantly increase transporting cement players' costs. It is uncertain how the government plans to gradually prepare industry and transportation companies' readiness to comply with non-ODOL policies fully.

Full enforcement is planned for 2023.