Govt issues decree to limit steel imports

Adianto P. Simamora, The Jakarta Post, Jakarta

The Ministry of Industry and Trade has issued a decree to limit the importation of steel products in a bid to help protect the local steel industry against mass imports of cheaper products.

Ministerial Decree No.751/2002, dated Nov. 7, stipulates that only local steel producers will be allowed to import hot-rolled and cold-rolled coils as raw materials or as supplements for production purposes. The imported goods will not be allowed to be sold or transferred to other companies, the decree said.

The measures are aimed at preventing the importation of cheaper steel into the local market, which has inflicted losses on local producers. Local steel producers have long demanded protection from the government, as the cheaper imports had severely hurt their businesses.

The decree said that authorized importers must seek approval from the ministry for the amount and the distribution schedule of their imports. The decree also stipulates that importers must submit monthly reports on imported goods, the failure of which would result in the revocation of their import licenses.

The decree came more than a week after the government increased tariffs on imported steel products to 20 percent for hot-rolled coil and 25 percent for cold-rolled coil.

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

According to one estimate, the world's total steel output in 2000 reached 828.5 million tons, compared with a total consumption of 812 million tons in the same year, resulting in a surplus of about 16 million tons.

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

Data from state-owned steelmaker PT Krakatau Steel showed that 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 and 26 percent.

Indonesia imports steel products from Korea, Japan and Russia.

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.