The government has just announced an ambitious plan to build 3 million homes every year.
This isn’t just about addressing the 13 million housing backlog, but also fixing 26 million homes that are unfit for living across Indonesia.
What’s interesting is that the program is split into two parts: rural and urban development.
In rural areas, the focus is on empowering small businesses, cooperatives, and village-owned enterprises to build 2 million homes per year.
Meanwhile, in urban areas, 1 million homes will be built, involving major contractors from both domestic and international companies.
This massive initiative isn’t just about building homes—it’s about creating economic opportunities, especially in rural areas.
This bold plan is far more ambitious than President Jokowi's previous program, which targeted only 1 million homes per year.
Now, with the target of 3 million homes per year, imagine how quickly the housing backlog could be resolved.
On top of that, a project this large will undoubtedly create a lot of jobs and accelerate infrastructure development across various regions.
But it’s not just about homes—this program will also impact other industries, especially cement manufacturers.
Just think, if each 36-square-meter house needs around 3 tons of cement, that means for 2 million homes alone, there will be an additional demand of 6 million tons of cement!
This amount is equivalent to almost 9.4% of total cement sales in 2023.
For cement producers, this news will surely bring big smiles.
Especially for those already holding a strong market share in Indonesia, this is a golden opportunity to boost their sales.
So, besides helping to solve the housing issue, this program could be a major boost for the cement industry, pushing factories to work even harder.
But don’t expect cement prices to skyrocket just yet because of this plan.
The reality is, a project of this scale will take time to fully get off the ground. The impact might only be felt in 2 to 3 years.
Why? Because rolling out a program like this isn’t instant.
There are plenty of factors that could slow down the process, from licensing issues, and bureaucracy, to contractor readiness on the ground.
So, even though the potential is huge, execution remains the biggest challenge. Delays or missed targets are always possible.
While the opportunity is big for cement producers, they’ll also need to be patient and keep their strategies in check, without expecting everything to run smoothly.
If this project is executed well, then the impact will be significant, both for the housing sector and related industries, especially cement.
If the housing plan comes to life, the cement sector will undoubtedly be one of the biggest winners.
We see a positive outlook for this sector, especially with Indonesia’s strong GDP growth, driven by increasing consumer purchasing power.
Additionally, the relatively cheap valuation of cement stocks right now provides a buffer, reducing downside risk.
INTP is our top pick due to its attractive dividend potential, with a payout ratio that could even exceed 100%.
With a dividend yield of around 6-7%, it’s an appealing choice for investors seeking stable returns.
Moreover, the Grobogan merger could be a game-changer for INTP, strengthening its position in Central and East Java while boosting cost efficiency in the long run.
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