Indonesian steel manufacturers urge the government to curb the dumping of steel by foreign traders in Indonesia. Hidayat Triseputro, Executive Director of the Indonesian Iron and Steel Industry Association (IISIA), says the key problem is the free trade zone in Batam (located close to Singapore) where steel can be imported duty-free.
Stakeholders in Indonesia's steel manufacturing industry, including foreign ones who have invested heavily in the establishment of steel manufacturing facilities in Indonesia, request the Indonesian government to implement anti-dumping duties on steel imports in Batam's free trade zone as their business is undermined by cheap steel imports.
In 2016 Indonesia consumed a total of 12.7 million tons of steel, while domestic manufacturers could only deliver 6.8 million tons (therefore the Indonesian government pushes for more investment in the nation's steel manufacturing industry). The remainder was imported from abroad, particularly from China where a chronic steel oversupply led to attractive prices.
Considering steel consumption in Indonesia is currently still very low with a per capita steel consumption figure of 65 kilogram per year, there is plenty of room for growth in the future, especially as Indonesia still requires ample infrastructure construction in the decades ahead. This situation should be lucrative for domestic steel manufacturers. However, if steel imports are too attractive, then it will be difficult to encourage a booming domestic steel manufacturing industry.
In other Southeast Asian countries per capita steel consumption is much higher. For example, in Singapore the figure is 1,036 kilogram per year, while in Malaysia it is 410 kilogram per year, followed by Thailand (296 kilogram per year) and Vietnam (164 kilogram per year).
Stakeholders in Indonesia's steel manufacturing industry also urge the government to set minimum technology standards for domestic steel manufacturing in order to prevent the relocation of Chinese steel manufacturers (to Indonesia) that use outdated technology (or risky technology - for workers and the environment - such as induction furnace).
The Indonesian government is currently encouraging the development of a steel manufacturing center in Cilegon with a production capacity of 10 million tons per year. This project is targeted to be completed by 2025.
Forecast Indonesian Steel Demand:
(in million tons)
Source: Bisnis Indonesia