Rini rebukes KS for lack of competitiveness
Abdul Khalik, The Jakarta Post, Jakarta
Minister of Industry and Trade Rini MS Soewandi criticized on Wednesday state-owned PT Krakatau Steel, the country's largest steel company, for its lack of competitiveness after more than 30 years under government control.
Rini was commenting on Krakatau Steel's recent complaint over her proposal to drop existing tariffs on steel imports amid a shortage of domestic supply.
Krakatau believes the move could threaten the company because it would allow for an inflow of cheaper imported steel.
"How can they complain about the tariff when they have benefited from the policy for so long? It is their own fault if they can't compete with foreign products," she said.
Rini added that Krakatau Steel should also consider the condition of the downstream industry, which had to buy steel at higher prices because of the tariffs.
"The global condition is worsening because the price (of steel) keeps on increasing and steel is in short supply. We must find a solution to this condition, and a zero tariff policy is an option. However, we are discussing all possibilities," she said.
Krakatau Steel was established in 1972, and under government control, it produced 2.5 million tons of steel annually. Until 2003, production volume remained at this rate.
Company director Daenul Hay told the press on Tuesday that Krakatau Steel planned to increase annual production to 3.5 million tons within the next five years, and 5 million tons within the next 10 years, which would required a US$800 million investment to realize the plan.
Daenul said the government's intention to abolish import tariffs, however, would discourage banks to provide loans to the company for expansion because of the government's withdrawing its protection of the steel industry.
Meanwhile, secretary-general Untung Yusuf of the Indonesian Steel Pipe Association said abolishing the tariffs would not drive down steel prices amid the supply problem.
"The problem is not related to tariffs, because steel is now difficult to obtain. The government must help us procure supplies from whatever sources possible," he told The Jakarta Post.