Govt probes country's first safeguard cases

Zakki P. Hakim, Jakarta

The government is mulling curbing the import of ceramics, bicycles, matches and glass panes in order to protect local producers that have been hardest hit by the increased influx of merchandise to the country.

The actions, termed "safeguard measures" by the World Trade Organization (WTO), will be the first of their kind to be taken by the government since it issued Presidential Decree No. 8/2002 to ratify the WTO pact on the issue, executive secretary of the Indonesian Trade Safeguard Committee (KPPI) Mardjoko said on Tuesday.

According to the agency's data, the products are mostly imported from China, with some from South Korea, Japan, Thailand, and Singapore.

Mardjoko said that as a WTO member, Indonesia has the right to impose a safeguard measure on any product that has been imported at such a rate that local producers are threatened, or their business damaged.

The measures could be in the form of a tariff increase, or quota imposition, or a combination of the two, he said.

According to Mardjoko, the government can impose a provisional measure on an imported product for a maximum of 200 days, soon after the committee launches an official investigation. A formal safeguard measure is then imposed if the investigation finds that the local producer has suffered due to a sudden jump in the import rate.

However, the formal measure would only be valid for a maximum of four years, and should be gradually phased out, said Mardjoko, who is also the Ministry of Industry and Trade's director of industrial product exports.

According to the committee, the Indonesian Ceramic Industries Association (Asaki) reported that a ceramic factory in Semarang, Central Java, had closed down, and a factory in Jakarta had run at only two-thirds of its capacity since mid last year, due to the influx of imported goods.

The committee, however, could not reveal the companies' name under the WTO rule.

Regarding bicycles, the agency is still discussing with the association of local producers whether to impose a safeguard measure on end products or components.

Meanwhile, the influx of imported gas lighters from China in the last five years has been blamed for causing local matches market shares to drop by 60 percent, while its glass panes control 40 percent of the domestic market.