Egypt's decision to drop dumping allegations against Indonesia could result in a 15 percent increase in Indonesian tire exports to Egypt, an ambassador said.
With the removal of the main trade barrier, there would be greater room for Indonesia to increase its tire exports to Egypt, Indonesian Ambassador to Egypt A.M. Fachir said during the weekend.
"I estimate that tire exports will grow by about 10 to 15 percent this year," he said, adding the impact of the ease in the trade barrier could be calculated within the next six months.
After an 18-month investigation, Egypt dropped in March a plan to impose a 40 percent anti-dumping tax on Indonesian tires.
While the investigation made by the Egyptian ministry of trade and industry found a slight margin of dumping by Indonesian producers, the ministry elected not to continue with the charges in the hope of developing better future trade relations.
Indonesia, which controls about 40 percent of the Egyptian tire market, has often been accused of flooding that market with low priced products to wipe out local producers.
Tire exports to Egypt are currently valued at between US$70 million and $80 million per year.
According to the Indonesian Trade Ministry, Indonesia's total bilateral trade with Egypt reached $638.89 million last year, a 24.2 percent increase from $514.42 million in 2006. Indonesia's exports were valued at around $589.55 million while imports were worth $49.33 million.
Director of trade supervision at the Trade Ministry, Martua Sihombing, said the decision to drop the allegations would help maintain Indonesia's competitiveness in the Egyptian market.
"Egyptian tire importers are mostly important people and our exporters have a good network with them, so I believe our exports will perform better there," he said.
The Indonesian Tire Producers Association said that with the dumping charges being dropped, overall tire exports could easily reach $1 billion this year as it was expected more countries would believe Indonesian producers had no intention to dump their products.
According to the association, Indonesia's total tire exports reached $820 million in 2007, mostly to Southeast Asia, the Middle East and Azerbaijan.
Martua said in a bid to avoid further dumping charges, the government would step up efforts to monitor prices of exported products so as not to disrupt pricing in the importing countries.
"But the most important thing is for there to be an intensified dialogue among related stakeholders on problems and achievable solutions. Technological cooperation could also be a solution for this," he said.
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