Indonesia Acts, S'pore Regrets

Jakarta bans sand exports to S'pore; Republic will turn to new sources,
steel-based construction

Sharon Vasoo
Deputy Foreign Editor
sharon@mediacorp.com.sg
Jan 25 2007
TODAY

For some time now, Singapore has been basking in its friendship with
Indonesia, trying to nudge foreign investors to go to its larger
neighbour. It has been a staunch supporter of Indonesia's Riau Island's
Special Economic Zones.

On Monday night, the warm ties had to negotiate a sand trap. Indonesia's
Trade Minister Mari Elka Pangestu unilaterally announced that her country
would ban the export of sand, soil and topsoil - a move that will affect
mainly Singapore which imports between six and eight million tonnes of
land sand annually. It comes at a time when Singapore's construction
sector has just roused itself from a long, lethargic spell and is set to
take off.

Singapore imports almost all the sand used in its buildings from Indonesia
but is confident that it will find other sources to bridge the shortfall.
It has also been persuading its developers to switch from sand-based
construction to using more steel - which is more easily available and
makes for quicker, cleaner projects.

Indonesia's decision may speed up this switch.

"It could also be an opportunity - just as our water disputes with
Malaysia led to our engagement with Newater," said an observer.

Nevertheless, Indonesia's sudden and swift decision has not gone down
well. "Singapore is disappointed," said a statement from the National
Development Ministry and the Building and Construction Authority.

Ms Mari said that Indonesia took this decision because its government
wanted to protect its environment and maintain the nation's maritime
borders. "After observations in the field, there is actually quite heavy
environmental damage and the banning of sand exports is a response to
this," she said.

It is understood that Singapore had offered to work with Indonesia to
address its environmental concerns.

"We regret that Indonesia did not take up our offer ..." said the
statement.

Still, Jakarta decided to go ahead with the ban under which exporters have
been given up to Feb 5 to honour existing sand contracts.

Observers say that the Indonesia's move was mainly to placate domestic
lobby groups and provincial ministers who feel that they have not
benefited from the trade that fetches Indonesia more than $120 million a
year from Singapore alone. It has been the Republic's main supplier of
sand since Malaysia banned exports in 1997.

On paper, the ban could affect between $60 billion and $90 billion worth
of projects here that are already in the pipeline. But there is not likely
to be any disruption at all.

"We have quite a sizeable sand stockpile, and we are prepared to release
the stockpile to meet the immediate needs of the industry," Dr John
Keung, BCA's chief executive officer told Channel NewsAsia.

Meanwhile, the alternatives are already clicking into place. The Housing
and Development Board has already started procuring sand from sources
outside Indonesia to produce concrete. At least one such ship, it is
understood, is already on its way to Singapore.

This arrangement will ensure that Singapore builders get a steady supply
of sand to make concrete for their buildings. But since the sand is being
shipped from areas much further away than Indonesia, industry experts said
that it was likely to be more expensive than Indonesian supplies. This
sand could add between 1 and 2 per cent to project costs, experts said.
So, it probably made more sense to switch to steel-based construction
which would be marginally more expensive - it could add 3 per cent to
project costs - but would see buildings come up faster, with less
dependence on foreign labour.

Backing this, Mr Keung said: "It is very important for us to move away
from such high dependency on sand export in construction work. We've been
trying to persuade the industry to move towards a more sustainable form of
construction, like the use of steel structure."

Industry experts that it was possible for Singapore to cut its sand
consumption by up to 70 per cent. This would mean that the Republic would
only have to import between one and two million tonnes of sand a year.

Of late, Britain has slashed its sand usage by up 70 per cent and Japan by
50 per cent.

The trend has caught on in Singapore too, with the National Library,
Capitol Tower and the Ang Mo Kio Hub Mall using steel more than concrete
in their structures. Even the Marina Integrated Resort design has a steely
edge to it.

The construction industry here is expected to shrug off the impact of this
ban sooner rather than later, observers said.

For now, they are more intrigued by the mixed signals that Indonesia is
sending as far as its relationship with Singapore goes.

"Sometimes governments are forced to make tough decisions, but these
decisions should not be seen as an expression of negativity against
another country," said Mr Wiryono Sastrohandoyo, a former Indonesian
ambassador and now a senior fellow at Jakarta's Centre for Strategic and
International Studies. Not many builders in Singapore will agree with
that.