CERAMIC TILE MARKET AND INDUSTRY
The economic and financial crisis that hit Indonesia in 1998 has made the building and construction sector practically bankrupt; the majority of construction projects were stopped and the property or housing industry came to a standstill. Construction companies and property developers were either bankrupt or forced to restructure their company’s financial condition. Along with this, the supporting industry to the construction sector also suffered badly, in particular the cement industry and ceramic tile industry. Many ceramic tile factories were forced to either suspend operation or decrease the production output drastically in order to survive the peak of the crisis during 1999/2000. Although the majority of the ceramic tile producers is also exporting their products, the export market could not completely compensate or substitute the losses caused by the weak domestic demand due to a very tight competition in the international market.
Signs of economic recovery came in late 2000 early 2001 with a number of property projects such as shopping centers, hotel and apartment buildings and housing projects commencing activities. With political stability restored and confidence in the country’s new government and leaders, many buildings destroyed during the riot of 1998 were in need of repair or restoration. Additionally, the government’s commitment to subsidize the low cost housing projects gave the necessary stimulus to the revival of this important economic sector. During this period of time, the total domestic ceramic tile consumption drastically increased to a level of around 153 million square meters, a level also, which was almost the same as for the pre-crisis consumption year of 1996 159 million square meters. Parallel with this positive development, the export performance also increased significantly during the years after 2000, as can be observed later in this report. The year 2003 earmarked the complete revival of the construction sector with further increase of ceramic tile production and consumption and this upswing can be expected for the coming years. Indonesia’s ceramic tile industry is blessed with abundant availability of necessary raw materials for the production of such tiles, e.g. kaolin, clay and feldspar and secondly, cheap manpower. Actually, this industry is developing much faster compared for instance to the development of other ceramic-based industry such as tableware; the reason is that the consumers nowadays will basically only use ceramic tiles to cover the floor of their homes rather than the cheaper and less attractive-looking cement flooring, a behavior change due to improved living standard and better income as well as purchasing power. This attitude is not only specifically referred to the urban population but also to the rural population. Indeed, the Indonesian ceramic tile industry is dominated by the production of ceramic floor and wall tiles, where these tiles are produced in standard sizes mostly ranging from 200 mm to 900 mm square or rectangular shape, glazed and unglazed ceramic surface, plain and textured designs as well as in various solid color finishes. Not only the domestically produced ceramic tiles are competing for customers, the imported ones also play a significant role and specifically marbles and granites for higher quality level of shopping centers, offices, apartment buildings and housing projects, since the marble quality available in the country is of less better quality, whereas granite is fully imported.
When comparing to the other, neighboring countries in the South East Asian region, Indonesia has currently the lowest per capita ceramic tile consumption of less than 1 square meter against 4 square meter in Thailand and 7 square meters in Malaysia; the market prospect, therefore, despite the low consumption figure, looks good for the future with the expected economic stability and growth and the increase in income and purchasing power of this 4th most populous country in the world. Room for future increase of consumption is definitely available.
Prior to the economic crisis in 1998, Indonesia registered nearly 50 ceramic tiles manufacturers and currently not more than 25 manufacturers are still in production with a total annual installed production capacity in excess of 160 million square meters. This capacity level makes Indonesia the 5th largest manufacturers of ceramic tiles in the world after People’s Republic of China, Italy, Spain and Brazil.
Signs of economic recovery came in late 2000 early 2001 with a number of property projects such as shopping centers, hotel and apartment buildings and housing projects commencing activities. With political stability restored and confidence in the country’s new government and leaders, many buildings destroyed during the riot of 1998 were in need of repair or restoration. Additionally, the government’s commitment to subsidize the low cost housing projects gave the necessary stimulus to the revival of this important economic sector. During this period of time, the total domestic ceramic tile consumption drastically increased to a level of around 153 million square meters, a level also, which was almost the same as for the pre-crisis consumption year of 1996 159 million square meters. Parallel with this positive development, the export performance also increased significantly during the years after 2000, as can be observed later in this report. The year 2003 earmarked the complete revival of the construction sector with further increase of ceramic tile production and consumption and this upswing can be expected for the coming years. Indonesia’s ceramic tile industry is blessed with abundant availability of necessary raw materials for the production of such tiles, e.g. kaolin, clay and feldspar and secondly, cheap manpower. Actually, this industry is developing much faster compared for instance to the development of other ceramic-based industry such as tableware; the reason is that the consumers nowadays will basically only use ceramic tiles to cover the floor of their homes rather than the cheaper and less attractive-looking cement flooring, a behavior change due to improved living standard and better income as well as purchasing power. This attitude is not only specifically referred to the urban population but also to the rural population. Indeed, the Indonesian ceramic tile industry is dominated by the production of ceramic floor and wall tiles, where these tiles are produced in standard sizes mostly ranging from 200 mm to 900 mm square or rectangular shape, glazed and unglazed ceramic surface, plain and textured designs as well as in various solid color finishes. Not only the domestically produced ceramic tiles are competing for customers, the imported ones also play a significant role and specifically marbles and granites for higher quality level of shopping centers, offices, apartment buildings and housing projects, since the marble quality available in the country is of less better quality, whereas granite is fully imported.
When comparing to the other, neighboring countries in the South East Asian region, Indonesia has currently the lowest per capita ceramic tile consumption of less than 1 square meter against 4 square meter in Thailand and 7 square meters in Malaysia; the market prospect, therefore, despite the low consumption figure, looks good for the future with the expected economic stability and growth and the increase in income and purchasing power of this 4th most populous country in the world. Room for future increase of consumption is definitely available.
Prior to the economic crisis in 1998, Indonesia registered nearly 50 ceramic tiles manufacturers and currently not more than 25 manufacturers are still in production with a total annual installed production capacity in excess of 160 million square meters. This capacity level makes Indonesia the 5th largest manufacturers of ceramic tiles in the world after People’s Republic of China, Italy, Spain and Brazil.
posted by Zumrowi Yunus at
2:30 PM
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