Government to issue policy to protect steel industry

Adianto P. Simamora, The Jakarta Post, Jakarta

The government is mulling various options for protecting the local steel industry against cheaper imported products, and a decision is expected within a few days, according to a top industry executive.

The president of state-owned steelmaker PT Krakatau Steel, Sutrisno, said on Tuesday that the options being considered included higher import tariffs, surcharges and other forms of protection.

"We (Krakatau Steel) are waiting for a government decision ... to limit steel imports," Sutrisno told reporters.

Local steel makers have long demanded protection on the grounds that cheap imports have caused serious damage to the local steel industry.

Sutrisno said that there was strong evidence to back up the steelmakers' arguments.

"We have showed the evidence to the government. Please wait for a government's decision within the next few days," he said.

Under World Trade Organization (WTO) rules, member countries are allowed to temporarily or permanently raise import duties to curb sudden influxes of certain imported products.

However, the member countries must be able to prove that the influx of imported products has caused serious damage to local companies.

Sutrisno said that other nations had also adopted measures to protect their local steel industries.

"We are worried that more imported products will enter the country if import tariffs remain so low," he said.

The import tariff on hot rolled coil (HRC) is currently set at 5 percent while for cold rolled coil (CRC) it is 10 percent.

Malaysia has raised its import duties on both HRC and CRC by up to 50 percent so as to protect its local companies, Sutrisno said.

Thailand, meanwhile applied the Thai Industrial Standard and a surcharge of 25 percent on steel imports, while the Philippine government planned to impose a 25 percent import tariff.

Krakatau Steel produces some 2.5 million tons of steel products every year, compared with a local consumption of about 3.9 million tons.

Indonesia imports steel products from Korea, Japan and Russia.

According to one estimate, the world's total steel output reached 828.5 million tons in 2000 compared with total consumption of only 812 million tons.

This means that there was an oversupply of about 16 million tons.

Several top steel producers earlier blasted the United States for slapping a hefty tariff on steel imports.

The U.S. government announced a tariff of up to 30 percent on steel imports effective from March 20.