Government raises import duty on steel products

Adianto P. Simamora, The Jakarta Post, Jakarta

The government has increased the tariffs on imported steel products from between 5 percent and 10 percent to between 20 and 25 percent to help protect the beleaguered local steel industry against cheaper imports.

The tariff on hot-rolled coil will increase to 20 percent, from five percent, while the tariff on cold-rolled coil will be raised to 25 percent from 10 percent.

The higher tariffs will be effective for one year from Nov. 1, the Ministry of Finance said in a statement.

Protection is needed to spare the domestic steel industry from "imbalances" in the global market, it said.

Local steelmakers have long demanded protection on the grounds that cheap imports had seriously hurt their business and other countries had imposed higher tariffs on the commodity to protect their industries.

In a news conference on Monday, Soetrisno, the president of state-owned steelmaker PT Krakatau Steel, said the United States had raised their tariffs on imported steel to 30 percent, Thailand to 25 percent, India to 40 percent and European countries had raised it to between 14 percent and 26 percent.

"Malaysia raised its tariffs to 50 percent in February this year but lowered it to 25 percent in August after stability returned to the market. However, that figure is still higher than ours," he said.

Indonesia imports steel products from Korea, Japan and Russia.

Krakatau Steel's data said the country's steel output reaches 2.89 million tons every year, of which some 2.5 million tons are produced by Krakatau Steel. Total consumption amounts to 3.9 million tons every year.

The global steel market has been in trouble for years due to an oversupply and the move by the U.S. this year to raise its tariffs to protect its local industry.

According to one estimate, in 2000, the world's total steel output reached 828.5 million tons, compared with a total consumption of 812 million tons. This means that there was an oversupply of about 16 million tons.

This situation forced many giant producers to dump their products in other markets outside the U.S., including Indonesia.

The Indonesia Antidumping Committee (KADI) is conducting an investigation into imported hot-rolled coil products from India, Russia and China, which are allegedly sold here through dumping practices.