Indonesia has issued a revised rule which will apply post border monitoring to control steel import, potentially limiting influx of overseas steel into the country, according to reports from local media.
Under the Trade Minister No. 110/2018, the ministry reassigns the task of checking iron and steel import under the custom service (border) through to Bonded Logistic Centers (PLB), from previously outside the custom service (post-border), Katadata reported.
It will be effective starting 20th Jan 2019, said Oke Nurwan, the director general of foreign affairs at the Trade Ministry as quoted by Katadata.
Another media, Kontan, quoted Nurwan as saying that the ministry doesn’t have a target how much it expects the new rule to lower steel imports.
“We will see. It depends. We don’t have any targets. We just try to send back imports,” said Nurwan as cited by Kontan.
Indonesia has been struggling to reign influx of cheaper overseas iron and steel products to boost domestic capacity.
Kontan reported that consumption of imported steel accounted for 55% of the country’s total consumption in 2018, rising from 52% in 2017. Indonesia’s steel demand in 2018 rose to 14.2 million tons, from 13.6 million tons in 2017, Kontan reported.
Purwono Widodo, marketing director of PT Krakatau Steel, said the impact of the new regulation will only apparent in Q2 this year because many importers still have permits valid until Q1.
With the new regulation, companies that import iron or steel including steel alloy will be subject to inspection by the custom and excise office, while companies with general import permits will have to put their imported steel at the Bonded Logistic Centers, Widodo explained as quoted by Kontan.
The new policy, Widodo said, showed that the government has acknowledged the deficit in steel trade. Citing the country’s trade ministry data, deficit in steel trade has reached USD 30.2 billion in the past five years.
The new revised regulation, Widodo said, is expected to tackle unfair trade causing by influx of cheap Chinese steel and to boost demand for domestic steel, he said. Krakatau Steel aims to sell 2.8 million tons of steel this year, rising from 2.1 million tons last year.
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