State-owned cement producer Semen Indonesia (SMGR) would further strengthen its foothold in Vietnam’s market by acquiring another local cement company in the country, the company’s executive said.

SMGR’s finance director Ahyanizzaman said in Jakarta on April 17 it had budgeted a total capital expenditure of between US$545.8 million and US$857 million this year to expand its operations, which includes the acquisition of the Vietnamese company.

He said the company’s accountants were currently conducting a due diligence audit of the Vietnamese company’s books and records, which should be completed by the end of June.

“The Vietnamese company is a private business, which has a local market share of about 4%,” Ahyanizzaman said on April 17 after the company’s general shareholders meeting.

If SMGR goes ahead with the acquisition, it would be Semen Indonesia’s second acquisition in Vietnam. Through its current Vietnamese subsidiary, Thang Long Cement Company (TLCC), SMGR produces about 2.5 million tons a year in the country.

Ahyanizzaman said the company would borrow up to Rp 1 trillion (US$77,742.30) to support the international expansion plan.

SMGR president director Suparni said the expansion was part of the company’s strategy to take advantage of the ASEAN Economic Community tariff reductions, which should come into effect by January 1 of next year.

Suparni said the company is projecting higher growth in sales volume in the third and fourth quarters this year after posting a sales growth of just 1.8% in the first quarter.

“We plan to export between 150,000 and 200,000 tons in the first half. In the second half, exports will drop due to seasonal factors,” Suparni said.