Tableware industry cries foul over competition

Tableware industry cries foul over competition

Zakki P. Hakim, The Jakarta Post, Jakarta

Indonesia's tableware industry has been losing out to cheap
imports, mostly from China, and is now clamoring for state
protection.

According to the Indonesian Ceramic Industry Association
(Asaki), surging imports have cost the local industry dearly,
including decreasing market share, closures and layoffs.

Asaki's foreign affairs director Indra Kangean told
journalists on Tuesday that imports of tableware had increased
continuously over the past few years to 45,000 tons last year
from 20,000 tons in 2001, of which over 95 percent came from
China.

As a result, the market share of imported products increased
to 65 percent from 50 percent in 2001. This situation had forced
five tableware manufactures to close down and lay off their
workers.

The industry used to employ 20,000 direct workers, but now we
only employ 10,000, Indra said.

"The rest have either lost their jobs or work less hours,"
Indra said, adding that a total of 2,500 workers had been laid
off over the past two years.

Responding to the industry's complaints, the Indonesian Trade
Safeguard Committee (KPPI) has agreed to investigate the amount
of damage caused by the cheap imports.

KPPI chairperson Halida Miljani told the press on Tuesday that
the committee had asked the government to introduce temporary
safeguard measures to protect the industry while the
investigation was underway.

"Under World Trade Organization rules, member countries are
allowed to apply safeguard measures to protect their domestic
markets," said Halida, a former Indonesian ambassador to the WTO.

The committee proposed to the Ministry of Finance that a
provisional import duty of Rp 2,746 per kilogram be imposed on
porcelain and other types of ceramic tableware.

"The provisional tariff will be subject to refund if the
investigation does not confirm that damage has been inflicted,"
Halida said.

The investigation itself, according to Presidential Decree No.
84/2002, must finish in 200 days.

The measure would affect all tableware imports from China and
other countries, including the United States, Australia, Hong
Kong, India, the United Kingdom, Italy, Japan, Germany, Malaysia,
France, South Korea, Singapore, Taiwan and Thailand.

Should the investigation confirm that damage had taken place,
a formal safeguard measure would be applied. The measure could
take the form of a tariff or a combination of tariff and quota.

Such a measure, however, could only stand for a maximum of
four years and the industry would be required to undergo gradual
liberalization.

The committee is now dealing with similar reports of surging
imports of bicycles, gas lighters and glass panels.

Despite losing out on the domestic market, Indonesia's
tableware industry managed to increase its exports to US$67
million last year from $58 million the previous year.

The industry's main markets are the United States, Turkey, and
the European and Middle Eastern countries.

However, Asaki projected that exports would likely drop this
year following a move by Turkey, Indonesia's third largest
market, to protect its local producers from imports counting from
last December.

Surging tableware imports in RI 1999-2001

Year Imports Market share Local demand

(tons) (percent) (tons)

1999 12,000 45 25,000

2000 24,000 51 35,000

2001 20,000 50 40,000

2002 37,000 60 52,000

2003 45,000 65 58,000

Source: Central Statistic Agency (BPS) and Asaki