Rini rebukes KS for lack of competitiveness
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.