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5 August 2020 (closed)
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Elisa Sinaga, Chairman of the Indonesian Ceramic Industry Association (ASAKI), is concerned about the zero percent import duty policy (applied per 2018) for Chinese ceramics that are shipped into Indonesia. This policy could lead to massive ceramic imports from China and encourage the deindustrialization in Indonesia's ceramic sector.
Currently, Chinese ceramics that are imported into Indonesia are subject to 20 percent import duties (under the category "highly sensitive products" within the China ASEAN Free Trade deal, abbreviated ACFTA), hence relatively few ceramic products are currently imported from the world's second-largest economy. Mainly only those types of ceramics that are not manufactured in Indonesia are imported from China. However, Sinaga detects a dangerous development. In 2016 ceramic imports into Indonesia grew 27 percent, while domestic ceramic sales in fact fell.
This development is attributed to the weak competitiveness of Indonesian-made ceramics. Due to Indonesia's high gas prices (gas accounts for between 30 - 40 percent of Indonesian ceramic producers' total production costs) Indonesian ceramic is more expensive compared to ceramic that is manufactured abroad (for example China). Meanwhile, ceramic demand in Indonesia remains bleak as the nation's property sector is still subdued.
In the government's third economic policy package (released on 7 October 2015) the Energy and Mineral Resources Ministry of Indonesia issued a regulation that lowers gas prices (for specific industries) "by a maximum of USD $2 per 1 mmbtu if gas prices are higher than USD $6 per mmbtu". This incentive is available to Indonesia's fertilizer, petrochemical, stainless steel, ceramic, glass, oleo-chemical and glove industries. However, only the fertilizer, steel and petrochemical industries can now enjoy cheap gas, while other industries are still waiting. Sinaga therefore urges the government to lower the gas price for the ceramic industry in order to allow it to become more competitive.
Per 2018 the import duties for ceramic products that are shipped into Indonesia from other ASEAN countries and China will be scrapped to zero, implying it will become increasingly difficult for Indonesian ceramic producers to compete with their ASEAN and China counterparts. Sinaga added that the high logistics costs in Indonesia form another major obstacle that undermine the competitiveness of Indonesian (ceramic) businesses. He claims it costs approximately USD $400 to transport products from China to Jakarta (without providing further details about this calculation), while its costs about USD $800 to transport products from Jakarta to Medan (North Sumatra).
Currently, only 65 percent of Indonesia's total installed annual ceramic production capacity is used (total annual capacity is estimated to have reached 580 million square meters, meaning Indonesia is potentially the world's fourth-biggest ceramic producer). However, Sinaga warns that if the situation deteriorates, then it could lead to deindustrialization because Indonesian ceramic manufacturers simply change into traders who import ceramic from abroad.
About 87 percent of Indonesia's ceramic production is absorbed by the domestic market, the remainder is exported, primarily, to Asia, Europe and the United States.