Govt may cut tariff on steel import

Govt may cut tariff on steel import

The Jakarta Post, Jakarta

The government is considering slashing import duty tariffs on
steel to between 5 and 10 percent to ensure high global prices
would not hurt local industry, the customs head said.

Director General of Customs and Excise Eddy Abdurrachman said
on Wednesday a study was exploring the possibility of reducing
the tariffs, which currently stand at between 20 and 25 percent.
The cuts were proposed earlier by the Ministry of Industry and
Trade, he said.

They would make steel-based industries more competitive, Eddy
said.

"The Minister (of Finance Boediono) is yet to come up with a
decision, which means it's still under consideration. We should
wait and see," he said.

The customs and excise office is a department under the
Ministry of Finance.

Driven by the bullish economy of China and the reconstruction
of Iraq, the global price of steel is rising, standing at about
US$420 per ton, against $310 per ton in December last year.

The Ministry of Industry and Trade proposed the tariff cuts to
help ease the burden on local companies that used steel as a raw
material.

Steel consumers, including industrial pipe producers and
shipmakers, have recently passed on their increased costs,
raising the prices of their products. There are fears other
sectors, including the automotive industry, will follow suit.

The Indonesian Steel Pipe Association (Gapipa) said steel pipe
makers had increased the prices of their products by an average
of 30 percent during the past three months to cope with price
rises.

A strong global price has also encouraged local steel
producers to focus on the export market, reducing the supply at
home and putting more upward pressure on prices. Indonesia
produces 2.6 million tons of steel per annum, far from the
national demand of some 6 million tons.

The Ministry of Industry and Trade has already removed trade
barriers on steel imports, opening up the market. Previously, it
allowed only certain local steel producers to import the good to
protect the local industry.

The policy was scrapped last week to reduce the shortages.