The Indonesian government has imposed safeguard tariffs for imported aluminum foil products - Photo: Privacy

JAKARTA (TheInsiderStories) – The Indonesian government has imposed safeguard tariffs for imported aluminum foil products, the trade ministry announced on Wednesday (11/07). The new regulation is made to anticipate a surge in imports that could potentially threaten the domestic industry.

The aluminum products that are subject to this tariff are those that are not printed or has no backing, with thickness below 0.2 millimeters, rolled, and with an aluminum content of 97.5 percent or more with number HS Ex. 7607.11.00, the ministry detailed.

The tariff for imported aluminum products is 6 percent for the first year (Nov. 7 2019 to Nov. 6, 2020). Then, in the second year period (Nov. 7, 2020 – Nov. 6, 2021), the tariff was set at 4 percent, it said.

This rate applies to imports from various countries, except 124 countries that have been excluded in the regulation. For aluminum products originating from those countries, they must be accompanied by a document certifying the origin of the product.

“The determination of the tariff was decided based on an investigation conducted by the Indonesian Trade Security Committee. The investigation shows that the domestic industry needs to be protected from the surge in imports of aluminum foil products,” said Chairman Mardjoko.

The tariff determination process is carried out with a trade minister letter Number 391 of 2019, which decided the imposition of tariffs on the import of aluminum foil products.

Furthermore, on October 24, 2019, the minister of finance has stipulated the regulation Number 153 of 2019 concerning the imposition of tariffs on imported aluminum foil products and comes into force after 14 days from the date of promulgation.

The additional import duty that is imposed is an additional general import duty as well as an additional import duty based on the applicable international goods trade agreement scheme.

In the event that the provisions in the international goods trade agreement scheme are not met, the imposition of safeguard import duties on imports from countries included in the goods trading agreement scheme is in addition to general import duties.

Previously, the government has said to encourage higher aluminum production, shooting at a figure of 1.5 – 2 million tons per annum (MTPA) by 2025, from around 250,000 MTPA at present. This is their attempt to enable producers to meet growing export market demand.

Beside, ministry of industry is implementing a number of policies to create a more conducive investment climate and encourage more investment in downstream and value-added industries, said Harjanto, the director-general. This in line with the instruction of President Joko Widodo to accelerate national strategic projects, including one being developed by state-owned aluminum producer PT Indonesia Asahan Aluminium (Inalum).

In 2017, Inalum produced 250,000-260,000 tons of aluminum, consisting of ingot alloy (90,000 tons), billet aluminum (30,000 tons) and aluminum ingot primer (140,000 tons).

According to the industry ministry, domestic demand for aluminum products currently reaches 900,000 tons per annum, far higher than domestic production of around 250,000 MTPA. This demand is projected to increase in line with the expansion of the country’s economy and the growth of its middle class.

The company is now planning to expand its capacity by doubling aluminum production to 500,000 MTPA by 2021. In the long run, Inalum targets to increase aluminum production to 2 million MTPA.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com