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Indonesia to tighten grip on steel imports to avert trade abuse
15/04/2014 - 02:16:10 | Read 2,837 Time(s)

The Jakarta Post reported that the Trade Ministry will pass a new arrangement for the importation of alloy steel with boron content to halt abuses that have affected the domestic steel industry.

Mr Bachrul Chairi the Trade Ministry’s director general for foreign trade said that “Boron content alloy steel importers will be required to get recommendations from the Industry Ministry and permits from the Trade Ministry. Local steel producers have demanded that the government curb the influx of imported steel with boron content, which sells at lower prices in the local market, because importers have abused the lower import duties imposed on the boron addition in imported steel.”

Mr Bachrul said that 'The policy will allow the government to safeguard local industry from an influx of unnecessary steel imports, while at the same time accommodating the interests of certain industrial sectors that still rely on such imports. The new rule, slated for immediate issuance, will divide steel importers into two categories: producer importers who use the material for production and registered importers who only resell the product. With such an arrangement, we will treat alloy steel with boron content differently from non alloy steel, thereby preventing abuses.”

Major steel makers such as Krakatau Steel and Gunung Garuda are expected to be among the industry players that will benefit from the Trade Ministry’s latest ruling. The automotive and construction industries rely on boron-added steel products. A very small content of boron in alloy steel offers a leeway for importers to avoid regular import duties and punitive duties comprising anti-dumping duties and safeguard duties.

Profile steel with boron content, for example, incurs import duties of up to 5% while non alloy steel which does not contain boron, is subject to higher duties of up to 15%. Non alloy steel or carbon steel in the form of hot rolled coil (HRC), cold rolled coil (CRC) and profile incur anti dumping duties of between 5.9% and 55.6%.

The jump in imports of alloy steel with boron content began in 2009, since when imports of non alloy steel have plummeted. A similar trend has also happened in neighboring countries, such as Malaysia and Thailand, but Indonesia is among the last to act against the problem.

According to a finding by the Industry Ministry, imports of HRC and CRC plunged markedly by 44% in 2010, 40% in 2011 and 25% in 2012 as they were allegedly imported under the category of alloy steel, of which outbound shipments from China, Japan and Taiwan rose considerably. The practice has caused the state losses of IDR 145 billion in tax revenues each year.

Mr Hidayat Triseputro executive director of Indonesian Iron and Steel Industry Association responded positively to the government’s move, saying that the new mechanism would benefit all industrial players. He said that “It is part of the controlling function performed by the government to ensure imports meet requirements and to avert abuse of product categorization. Through such a move, the downstream industry dependant on imported boron added steel would not face a shortage of supply.”

Source – The Jakarta Post.com

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