Stop CMS’ Monopoly; Liberalise The Cement Industry In Sarawak

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Aziz Isa, right, the Special Assistant to Chong Chieng Jen, Sarawak Pakatan Harapan Chairman and Thomas Sixtus Tegong Laka, the DAP Go Rural Spokesperson.

By ABDUL AZIZ ISA & THOMAS SIXTUS TEGONG LAKA
COMMENT: We call upon Johari Openg, the Chief Minister of Sarawak to terminate the monopoly on the supply of cement by CMS (Cahya Mata Sarawak) and to allow other suppliers to come into the State as this will help stabilise the supply of cement and reduce the price (for the construction) of houses.

It is well known that property prices such as housing in Sarawak has become very expensive, making it unaffordable for the low and middle income groups, and one of the reasons is the price of building materials such as cement that has been monopolised by CMS for decades.

Cement is an essential material that is required for the development of infrastructure. Thus, taking into consideration the rising costs of manufacturing and delivery of building materials, a price hike would increase the construction costs which in turn would lead to higher property prices causing additional costs to house buyers.

CMS Cement Sdn Bhd, a subsidiary of conglomerate CMS, is the state’s sole cement producer in Sarawak with two grinding plants: one in Kuching and one in Bintulu, producing a combined total annual production capacity of 1.8 million tonnes (MT) per year. CMS Cement Industries Sdn Bhd, another subsidiary company, is Sarawak’s sole manufacturer of clinker at its plant in Mambong with a rated capacity of 900,000 MT per year.

A worker stacking cement bags produced by CMS. – Photo credit CMS website

Following its deregulation in June 2008, cement price is no more a controlled item and manufacturers do not require government’s approval for a price increase or decrease. This means that the market forces do not dictate the price, but it will be at the manufacturer’s discretion.

Monopoly is bad for the state’s economy. This is because monopolists tend to collude and create an artificial shortage to increase the price of their products. Thus, when there’s a severe shortage of cement in the state, the whole industry is affected including the construction industry.

Since Sarawak is planning to build 12 more dams, it requires more cement for the construction of roads leading to the dam sites apart from construction of other infrastructures. It is expected that the supply of cement will be insufficient to meet the demands of the construction industry. This is one of the factors that cause the increase of property price in Sarawak.

There are nine cement players in the country, the others being Lafarge Malayan Cement Bhd, YTL Cement Bhd, Cement Industries of Malaysia Bhd (CIMA Group), Tasek Corp Bhd, Hume Cement, Holcim (Malaysia) Sdn Bhd, Aalborg Portland (Malaysia), and Cement Industries (Sabah).

As such, Abang Jo should liberalise the cement industry in Sarawak to open the door for other players in the state. By encouraging healthy competition for cement industry in the state, the government will be able to stabilise housing prices to make it affordable for the low and middle income groups.

Abdul Aziz Isa is Special Assistant to Chong Chieng Jen, Sarawak Pakatan Harapan Chairman and Thomas Sixtus Tegong Laka is DAP Go Rural spokesperson