Indonesia’s ceramic industry has reached a major milestone: full self-sufficiency with a production capacity of 650 million square meters annually. This achievement positions the sector to support national housing goals, including the ambitious 3 million-home program under President Prabowo. Yet, industry leaders warn that without stable energy supply and protection from import surges, competitiveness could be at risk.
Key Facts & Background
- The Indonesian Ceramic Industry Association (Asaki) announced that domestic production capacity now meets national demand, totaling 650 million square meters per year.
- The industry is prepared to support the government’s flagship program to build 3 million housing units.
- Asaki emphasized the need for government support in two key areas:
- Reliable and affordable natural gas supply under the Harga Gas Bumi Tertentu (HGBT) scheme.
- Protection against rising imports, particularly from India, which surged 130% in the first five months of 2025.
- Gas supply in West and East Java remains below optimal levels, forcing some manufacturers to pay higher prices due to distribution surcharges (agit).
- Asaki proposed implementing a Domestic Market Obligation (DMO) for natural gas, similar to the coal sector, to stabilize supply and pricing.
- Utilization rates in the ceramic industry rose to 71% in H1 2025, up from 60% YoY, but still below the target of 75%.
- Domestic ceramic production increased by 62 million square meters in H1 2025, marking a 16.5% growth.
- Rising production costs and import competition continue to challenge profitability and market share.
Strategic Insights
Indonesia’s ceramic industry stands at a strategic inflection point. Achieving self-sufficiency is a testament to years of investment, innovation, and policy alignment. It also signals readiness to play a central role in national development, particularly in housing and infrastructure. However, sustaining this momentum requires a recalibration of energy and trade policies to shield domestic producers from external shocks and internal inefficiencies.
Energy remains the industry’s lifeblood. The HGBT program was designed to ensure affordable gas for key sectors, but uneven implementation—especially in Java—has created cost disparities that threaten competitiveness. Manufacturers forced to pay premium rates due to distribution surcharges face margin erosion, limiting their ability to reinvest and scale. A DMO for natural gas could offer a structural solution, ensuring priority allocation and price stability for domestic industries, much like the coal sector’s model.
Trade dynamics further complicate the landscape. The global tariff war has redirected ceramic exports from countries like India into Indonesia, flooding the market and undercutting local producers. Without adequate safeguards, such as anti-dumping measures or import quotas, domestic manufacturers risk losing ground despite their capacity and quality advantages. Strategic trade policy must balance openness with resilience, ensuring fair competition while protecting national industrial assets.
The uptick in utilization and production is encouraging, but the gap between actual performance and Asaki’s target highlights lingering vulnerabilities. Bridging this gap will require coordinated action across ministries—energy, trade, industry, and finance—to align incentives, streamline regulation, and foster innovation. The ceramic sector’s role in housing, urban development, and export diversification makes it a vital pillar of Indonesia’s industrial strategy.