Over the weekend, the Indonesian Automotive Industry Association (Gaikindo) confirmed that the government will not impose anti-dumping duties on steel imported for the manufacturing of vehicles.

Currently, Indonesia's automotive industry requires about one million tons of steel plates, 500,000 tons of hot rolled-steel, and another 500,000 tons of cool-rolled steel each year. The majority of these items are imported from countries that have been affected by the recently-introduced anti-dumping duties on steel imports. However, Gaikindo said these products are not yet available on the domestic market. As such, the anti-dumping duties have limited effect; after all, the automotive industry would need to import these steel products anyway in order to manufacture cars.

I Gusti Putu Suryawirawan, Director General of Metal, Machinery, Transportation Equipment and Electronic Industries at Indonesia's Industry Ministry, told reporters he agrees that the exemption for the automotive industry makes sense as domestic supply is limited.

Anti-Dumping Duties on Imports of Steel Products:

Country of Origin Tariff Range
China 13.6 - 43.5
Japan 18.6 - 55.6
South Korea 10.6 - 11.0
Taiwan 7.0 - 20.6
Vietnam 12.3 - 27.8

Source: Finance Ministry Regulation No. 65/2013 on Anti-Import Duties

Warih Andang Tjahjono, Vice President of Toyota Motor Manufacturing Indonesia, said the government should be more careful when making new policies and involve the academic as well as the business community to make effective and efficient policies. The aforementioned anti-dumping duties for steel imports was clearly a mistake in the case of the automotive sector. As a consequence of the regulation the vehicle production process at Toyota Motor Manufacturing Indonesia was affected as imports became expensive.

In order to supply the whole range of steel products that are needed by the automotive industry to produce cars, Indonesia's largest steel maker Krakatau Steel and Japan-based Nippon Steel & Sumitomo Metal Corporation created a joint venture two years ago. Construction of the plant is in progress and should be completed by 2018.