2025, large-scale protests and riots broke out throughout Indonesia, triggering social unrest and causing chain reactions in many areas of the economy. As the core support of construction and infrastructure, the cement industry is facing unprecedented challenges. Before the riots broke out, Indonesia's cement industry was already facing a severe test. According to the Indonesian Cement Association (ASI), in the first half of 2025, Indonesia's domestic cement sales reached 27.7 million tons, down 2.5% year-on-year. Affected by the slowdown of domestic infrastructure projects, the overall demand for cement in Indonesia has declined. Apart from Sumatra, Maluku-Papua and infrastructure projects, which supported the growth of cement sales, sales in other regions declined, and cement prices also showed a downward trend. As a big cement country in Southeast Asia, Indonesia's industry is highly dependent on infrastructure investment, such as the new capital construction project. But global economic volatility and tight domestic budgets have weakened demand. In addition, cement production itself is a high carbon emission industry, accounting for about 8% of global CO2 emissions. Under environmental pressure, the industry is facing transformation challenges, which are further amplified by the riots.
The unrest has centered on economic centers such as Jakarta, Bandung and Surabaya, which are key hubs for the transport of raw materials for cement, such as limestone and coal. The protests led to road blockades, disruption of port operations and logistical delays. For example, many parliamentary buildings and government offices were burned, and traffic paralysis directly affected the supply of raw materials and the distribution of finished products in cement plants. Safety concerns may force companies to temporarily shut down and increase production costs. Investors are worried that the escalation of riots will further disrupt the industrial supply chain, leading to foreign capital hesitating to enter the Indonesian market. In addition, factories may become the target of riots, indirectly affecting heavy industries such as cement.
Cement demand mainly comes from infrastructure and real estate. The unrest has led to delays in several projects, including government-led public works. For example, major infrastructure such as the construction of the new capital may be slowed down by budget redistribution and security issues. Protesters' accusations of government corruption and economic injustice have further undermined confidence in public investment. In addition, rising unemployment (the highest level in Southeast Asia) and rising consumer prices have exacerbated the housing market downturn. Some organizations predict that high economic costs will lead to the closure of small and medium-sized enterprises and indirectly reduce construction demand.
The riots have triggered pressure on Indonesia's stock and bond markets and currency fluctuations. Foreign capital has turned into a net outflow in the past few days, and investors are increasingly worried about policy uncertainty and social unrest. As a capital-intensive industry, the cement industry is highly dependent on foreign capital and technology imports, and this loss may delay the recovery of the industry. Historical experience shows that the "Black May" riots in 1998 led to a complete economic collapse, and the construction industry was the first to bear the brunt. Although the scale of this incident is small, if it continues, it may repeat the same mistakes.
In recent years, Chinese cement enterprises have increased their investment in Indonesia and made important contributions to the development of the local cement industry by virtue of advanced technology and management experience. By the end of August, the clinker production capacity of Chinese enterprises in Indonesia had exceeded 10 million tons. The riots will undoubtedly bring many challenges to China's cement enterprises. On the one hand, the supply of raw materials and the transportation of products in some enterprises have been seriously affected, resulting in the obstruction of production progress. On the other hand, the decline in market confidence and the loss of investment have also made the business expansion of Chinese enterprises in Indonesia face greater uncertainty. In the
short term, Indonesia's cement industry may face the risk of further decline in sales and rising costs. But if the government quickly quells the unrest and restores economic confidence, the industry may be able to rebound with infrastructure investment.
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