The recent trimming of the Nusantara Capital City (IKN) budget to Rp 14.8 trillion this year has begun to significantly impact the nation’s construction supply chain. Notably, the cement industry has recorded a substantial contraction, with sales plummeting by over one million tons within the first ten months of the year.
According to data from the Indonesian Cement Association (ASI), national cement sales have experienced a year-on-year contraction. This downturn is primarily fueled by a weakening demand across two key islands: Kalimantan and Java, highlighting a broader challenge facing the domestic market.
Ari Wirawan, Secretary General of ASI, elaborated on the sharp decline in cement sales volume. Between January and October 2025, the most significant drop was observed in Kalimantan, where sales fell by 828,356 tons—from 4.7 million tons in the first 10 months of 2024 to 3.88 million tons. Concurrently, Java saw its cement sales shrink by 556,468 tons, settling at 27.07 million tons.
“Domestic cement sales from January to October 2025 continue to show a negative trend, affecting nearly all regions with a 2.5% decrease compared to the same period in 2024,” Ari informed Katadata.co.id on Wednesday (26/11).
This market contraction comes as the Ministry of Public Works previously announced that the development of the Nusantara Capital City faced initial setbacks this year due to a budget freeze. Furthermore, the IKN construction budget for this year was drastically cut by over 65%, dwindling from last year’s allocation of Rp 43.4 trillion to a mere Rp 14.87 trillion.
Based on ASI’s comprehensive data, national cement sales for January-October 2025 declined by 2.5%, moving from 53.22 million tons in the corresponding period last year to 51.9 million tons. Mirroring this trend, cement production also saw a notable drop of 5.6%, reaching 52.86 million tons.
Despite the overall downturn, Ari pointed out that the national decline in cement sales was somewhat mitigated by an increase in demand from ongoing toll road construction projects in Sumatra and Nusa Tenggara. Sales in Sumatra rose by nearly 2% year-on-year to 11.59 million tons, while Nusa Tenggara experienced almost 3% growth, reaching 3.46 million tons.
He further clarified that the boost in Sumatra’s cement sales was driven by the continued construction of the Kayu Agung-Betung toll road, specifically the 70.19-kilometer Palembang-Betung section. Meanwhile, the demand for cement in Nusa Tenggara stemmed from the development of the Gilimanuk-Mengwi toll road and various supporting tourism infrastructure projects.
Beyond domestic figures, Ari also reported a robust increase in cement export volume. From January to October 2025, exports surged by over 20% year-on-year, totaling 1.11 million tons. The primary destinations for these exports during the period included Bangladesh, Taiwan, Australia, Timor Leste, and Sri Lanka, showcasing diversified international markets for Indonesian cement.
“Consequently, the utilization of the cement industry for January-October 2025 reached 53%. We estimate that utilization will increase to 54.2% by the end of the year,” he stated, offering a cautious outlook.
Earlier, ASI Chairman Lilik Unggul Raharjo had expressed optimism, suggesting that production utilization could potentially rise to 60% this year. However, this ambitious target is contingent on the proposed increase in the home renovation program budget to Rp 43.6 trillion actually materializing.
Should the additional funding for home renovations be realized, it could significantly boost national cement consumption by an estimated 4 million tons. According to Lilik, such a plan would provide crucial support for the cement industry, which saw its demand shrink by 1.8% year-on-year in the first five months of the current year.
Currently, cement consumption for this year is projected to increase by only 2.2 million tons. However, with the successful implementation of the home renovation budget, there is a substantial potential to elevate domestic cement consumption by an additional 6.2 million tons.
“A 4 million ton demand growth is admittedly somewhat optimistic. Nevertheless, our fervent hope is that the increased budget for home renovations will indeed come to fruition,” Lilik concluded, underscoring the industry’s reliance on government stimulus.
Summary
The Indonesian cement industry experienced a significant contraction, with national sales plummeting by 2.5% to 51.9 million tons between January and October 2025 compared to the previous year. This downturn is primarily attributed to a sharp reduction in the Nusantara Capital City (IKN) construction budget, which was cut by over 65% to Rp 14.8 trillion this year. Kalimantan saw the most substantial drop in cement sales, followed by Java, indicating a weakening domestic demand affecting the construction supply chain.
Despite the overall decline, increased demand from ongoing toll road projects in Sumatra and Nusa Tenggara partially mitigated the national slump, while cement exports also surged over 20% during the same period. The industry’s utilization reached 53%, with projections to slightly increase by year-end. Future growth in cement consumption, potentially by an additional 4 million tons, hinges on the realization of a proposed Rp 43.6 trillion budget increase for home renovation programs.
