Siam Cement Group (SCG) is known as one of the most prominent producers of cement in Southeast Asia. The Thai group penetrated the Indonesian market in 1995 with its business line and has grown to be a major player in not only the cement industry, but also the petrochemicals and building materials industries.
Through SCG Cement-Building Materials, SCG Chemicals, and SCG Paper, the company continues to establish its existence in the Asian market. A while back, Tempo’s own Ananda Teresia got the opportunity to interview Siam Cement Group CEO Kan Trakulhoon and listened to Kan talk about his company’s expansion plans for Indonesia. Excerpts:
What is Siam Cement Group’s key to success?
We have human resource assets that must be maintained and developed. There is not special strategy. We just focus on developing existing potentials. Indonesia has great potential. We arrived here in 1995 and it turns out, what we started has continued to go well up until now.
What is the company’s expansion plan for Southeast Asia this year and how much will it invest?
Southeast Asia is one of the areas that have potential. We have allocated US$7 billion for investments and business units for the next five years. Over 50 percent of this investment value will be used for investments and expansions outside of Thailand.
Your country will certainly get the most out of other Southeast Asian countries. We will begin and continue many investment commitments in Indonesia, not just for cement, but also for petrochemicals, building materials, and paper.
In Indonesia, the factory we are constructing in Sukabumi, West Java, will be complete and able to operate as soon as possible. The factory has a production capacity of 1.8 million tons per year. Aside from that, we will build a cement factory in Myanmar.
How was SCG’s performance this year?
SCG has had a total investment of $988 million during the first quarter of this year, and 55 percent was centered in ASEAN. Sales in ASEAN during the second quarter of this year reached $318 million.
In Indonesia, SCG booked sales income amounting to $105 million during the second quarter this year. Overall, during the first semester of 2013, sales in Indonesia reached $214 million, up 17 percent compared to last year. Extremely positive.
How do you feel about competing with local producers?
We have been in this business for a long time. Not just in Indonesia, but also in Thailand and many other ASEAN countries. Competition with local players is natural and will always happen. This is not an obstacle for us.
A lot of competition actually benefits consumers. We are not afraid of local producers because we are certain that we can compete, and we have our own unique qualities.
Regarding an IPO (initial public offering), we have no plans to hold any so far. We have not felt the need to hold one in order to sustain in the Indonesian market.
Do you have any plans to expand with Chandra Asri?
We, along with Chandra Asri, have an expansion plan for this year. We will realize it, but we are still conducting an in-depth analysis and having talks. Regarding the expansion plan, we cannot reveal anything yet because there are still confidential matters related to Chandra Asri. The important thing is that we can see that the sector we plan to work on together with Chandra Asri has great prospects.
The global economy is currently weak. Do you still have any prospects amid this situation?
We see that Asia is still lively amid the world’s slow paced economy. Indonesia still records a positive economic growth despite other economies being sluggish. As I said, Indonesia and other ASEAN countries are still promising despite the slow economy. I think, without any prospects, we will not be doing various types of expansions. (*)
