Indonesian government imposed a safeguard duties on construction steel

10 February 2015

The government has imposed a safeguard duty on imported construction steel to curb a sharp rise in shipments into the local market, shipments that are hurting the domestic industry.

The measure is set to last for three years, from Jan. 21 this year to Jan. 20, 2018, according to a press statement from the Trade Ministry circulated on Monday.

In the initial year, the products affected — I-shaped and H-shaped sections — will be charged with safeguard duties set at 28 percent of their prices. The import duties will be lowered to 26 percent and 18 percent respectively in the second and the third years.

Indonesian Trade Security Committee (KPPI) chief Ernawati said that the jump in imports of I and H sections of other steel alloys had negatively affected the domestic industry because of the loss of the market share taken by the increased imports, a rise in inventory and losses, Ernawati said.

“The KPPI proves that there is a causal link between a surge in import volume and the serious injury experienced by the applicant,” she said in the statement.

The local industry is represented by one petitioner, major steel maker PT Gunung Garuda, which controls the biggest share in the domestic market.

The safeguard measure is a procedure under the World Trade Organization (WTO) that permits a government to act against an unusual increase in imports of similar goods from trading partners. The temporary measure normally takes the form of additional duties or import quotas lasting several years.

The committee launched the official investigation into the case on Feb. 12 last year after Gunung Garuda complained about a serious injury posed by a surge in imports.

The enquiry found out that from 2010 to 2013 imports of I-shaped and H-shaped steel surged significantly from a low level of 20,331 tons in 2010 to 395,814 in 2013, according to the committee.

The safeguard duties will apply to key suppliers: China (with a share of 96.62 percent), South Korea (1.56 percent) and Singapore (0.96 percent).

Gunung Garuda executives did not reply to The Jakarta Post’s request for comment.

Indonesian Iron and Steel Industry Association (IISIA) executive director Hidayat Triseputro welcomed the committee’s move to impose the safeguard duties, saying that it would serve as a temporary means to help the affected firm survive the injury.

“That’s the right measure because the firm needs a temporary cure to recover from the injury,” he said. He also expected that the local industry could meet domestic demand.

At present, the I-shaped and H-shaped sections are also produced by PT Krakatau Wajatama, as well as by Gunung Garuda.

Iron and steel products are prone to trade disputes worldwide. Indonesian producers like state-owned PT Krakatau Steel have repeatedly been accused of dumping their products overseas. In the same way, Indonesia also aims such charges against foreign manufacturers.