Govt to raise import duty on steel-related products

Adianto P. Simamora, The Jakarta Post, Jakarta

The government is planning to increase import tariffs on steel- related products to help protect local industries from cheaper imported products, according to an official.

"We are studying the possibility of 'harmonizing' the (import) tariff in the upstream and downstream industries," Subagyo, director general for metal, machinery, electronic and miscellaneous industries at the Ministry of Industry and Trade, said on Monday.

"In principle, import tariffs in the downstream sector should be higher than those in the upstream," he added.

The down stream industry produces steel-related products such as pipes. The import tariffs on downstream products currently range from between 5 percent and 10 percent.

Meanwhile, the upstream industry produces steel products like hot-rolled coils (HRC) and cold-rolled coils (CRC). The government recently raised the import tariff on HRC and CRC to 20 percent and 25 percent, respectively, from 5 percent and 10 percent.

Many players in the downstream industry have long called on the government to make a structured tariff policy for the domestic steel industry.

the Association of Indonesian Steel Pipe Manufacturers (Gapipa) had proposed a higher import tariff of up to 35 percent.

Indonesia imports steel from Japan, South Korea and China.

According to one estimate, in 2000, the world's total steel output reached 828.5 million tons, compared with a total consumption of 812 million tons. This means that there was an oversupply of about 16 million tons.

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