Standardizing Cement Prices in Papua

President Joko Widodo desires uniform cement prices throughout Indonesia, including Papua. However, this is currently difficult to achieve. A 50-kilogram bag of cement costs approximately Rp 70,000, but in remote areas of Papua, the price can reach Rp 1,000,000 or even more. High logistics costs make cement extremely expensive and unaffordable for the local population in Indonesia's easternmost region. Not all areas of Papua are accessible by land, resulting in air freight for logistics, which significantly increases transportation costs.

The very low cement consumption in Papua and Maluku compared to national demand discourages investors from building cement factories in Papua. The lack of economic viability due to minimal demand is the primary reason. Cement consumption in Papua and Maluku from January to November 2016 was only 1.35 million tons, or 2.39 percent of the total national consumption of 56.5 million tons. Investors prefer building cement factories in Java, where the market is established.

Government infrastructure development has attracted investment from foreign cement producers in Indonesia. Several new cement brands have emerged, such as Semen Merah Putih, Semen Garuda, Semen Puger, and even the Chinese cement company, Anhui Conch, are competing for market share in Indonesia. However, cement factory construction remains concentrated in western Indonesia, particularly in Java, which has the largest market share.