Ruling drafted to safeguard domestic companies

Adianto P. Simamora, The Jakarta Post, Jakarta

The Ministry of Industry and Trade has completed the draft of a governmental regulation which aims to safeguard local manufacturers against competition resulting from an "unexpected" influx of imports.

Alfons Samosir, the ministry's deputy director for international trade, said over the weekend that the draft of the "regulation on safeguard measures" was completed last year and was submitted to President Megawati Soekarnoputri for approval.

"We hope the draft regulation will be approved and implemented this year," he told The Jakarta Post.

According to Alfons, the safeguard mechanism is consistent with the World Trade Organization's (WTO) rulings which allow member countries to temporarily or permanently raise import duties to curb a sudden influx of certain imported products to protect local manufacturers.

"In the increasingly open market, sudden and unexpected influxes of imported products are likely to happen. One of the WTO goals is to create a freer market where trade barriers are gradually cut or phased out," he said.

Almost all WTO members have such a safeguard regulation, Alfons said, recalling that the Philippines had once applied such a ruling on Indonesian cement imports.

Under the draft regulation, the government may impose a higher duty on certain imported products if the imports enter the country in such a massive and quick way that they may threaten the survival of local companies.

The higher import duty will first apply for six months and, if during investigation the government finds that the imports can seriously injure the local industries, it could stay in place for four years.

Alfons, who is also the secretary of the team drafting the regulation, said the ministry was obligated to make the regulation in view of the difficulties being experienced by local manufacturers due to the massive imports of products like textile and electronics from China.

Lee Khan Hyun, general manager of PT Samsung Electronic Indonesia earlier told The Post that the country's electronic industry was really concerned with the influx of cheaper electronics which he suspected were illegally brought into the local market.

"Fifty percent of the local market has been seized by the imported products," Lee said.

Indra Ibrahim, executive director of the Association of Indonesian Textile Producers (API) said the country's textile industry was now concerned with the influx of textile products from China and India.

"It has really hurt our share in the local market," he told The Post.

Indra said he was unaware of the WTO safeguard mechanism or the ministry's move to draft the safeguard regulation.