Local steel is still less competitive than imports, what can the government do?

Local steel is still less competitive than imports, what can the government do?

Source: | 10 December 2022

Steel is an essential factor for the development of the construction and manufacturing industry. Including in Indonesia which is currently massively building infrastructure.

Therefore, the durability and utilization of steel products needs special attention. Director of Construction Sustainability at the Ministry of Public Works and Public Housing (PUPR) Kimron Manik explained that the national industrial capacity is very excessive (excess capacity).

“However, the utility of domestic construction steel production is not optimal due to the large use of imported construction steel, both in the form of raw materials and finished products at more competitive prices due to unfair trading/dumping practices carried out by exporting countries,” he said in a press release, Saturday. (10/12/2022).

He explained that from data from the Ministry of PUPR the total production capacity in 2021 was 20.97 million tons with an average production capacity utilization rate in 2021 of 55.26% and the national steel supply in 2021 was 11.59 million tons. Meanwhile, national steel consumption or demand reached 15.46 million tonnes, 78% of which was for the construction sector.

Coordinator of the Ferrous Metal Industry Sub-Directorate of the Ministry of Industry, Rizky Aditya, explained that to encourage the development of upstream, intermediate and downstream metal industries, as well as providing protection for domestic consumers, the Ministry of Industry has implemented 29 mandatory SNIs for metal products, and 23 of them are steel products.

“The details are 4 SNI for steel bars, 4 SNI for sheet steel, 5 SNI for profile steel, 3 SNI for prestressed steel, 2 SNI for steel wire rope, 2 SNI for steel pipes and pipe connectors, and 3 SNI for steel tubes and LPG stoves,” he said.

Member of Commission VI DPR RI Herman Khaeron said there were several problems that could be identified. Starting from support for the supply of imported steel raw materials which is not optimal, with 50% of the national industry still filled with foreign products.

Then, the domestic upstream industry has so far only focused on importing raw materials, plus the utilization rate of domestic raw materials is low. It is known that in 2021 imports of machinery & other equipment will reach almost US$ 26 billion, an increase of 40% compared to 2020.

Therefore, the government’s commitment is needed to enforce firm and mandatory standards, especially for SNI and the implementation of the Domestic Component Level (TKDN) in order to encourage the use of domestic steel production which has not been maximized to date. No less important is supporting the optimization of the Ministry of Industry’s plans in implementing the master roadmap for the development of the national iron and steel industry for 2015-2035. There are several problems that need attention and anticipation when starting construction work.

Chairman of the National Consumer Protection Agency (BPKN) Rizal Halim explained that SNI is not yet complete for all light steel products, design and construction. “Then, there is a lack of consumer information and knowledge about light steel products, as well as the high use of imported light steel raw materials which are much cheaper but whose quality is less guaranteed,” he said.

To withstand the onslaught of imported products, Rizal encouraged the government to immediately require SNI for light steel profiles for all light steel industry players doing business in Indonesia. “It is no less important to continuously educate consumers about the importance of buying SNI products,” he said.


Bakrie & Brothers history bg

The Company’s journey began with the story of a growing small trading business, and in more than 75 years has engaged in investment/divestment business, has reached various achievements and delivered the Company to become one of the leading corporations in Indonesia.