Government to issue policy to protect steel industry

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.