The Indonesian government considered to relax the scrap metal import rules to support the downstream industry, said the minister yesterday (02/12) - Photo by Industry Ministry Office

JAKARTA (TheInsiderStories) – The Indonesian government considered to relax the scrap metal import rules to support the downstream industry, said the industry minister Agus Gumiwang, yesterday (02/12). Its expecting the new policy will lead to a reduction in imports of steel billets.

At present, he explained, scrap metal included in the government’ list of dangerous and poisonous waste. Importers of such waste must have a licence and must obtain numerous permits from the ministries of industry, environment and trade. He noted, the new government measure would exclude scrap metal from that lists and potentially reducing the number of permits.

Currently, the needs of scrap metal reach 9 million tons from local producers, which can support billet production of 4 million tons per year in the country, he adds. According to the minister, if the plans goes well Indonesia will saving import costs around US$400 million per annum.

In addition, said Gumiwang, if the country’ mills can rise their utilisation rates, they have ability to supply 70 percent of domestic steel product demand. He stated, the local steel industry utilizing now only about 40 percent of its capacity, partly because the companies not have enough materials for production.

“One of the home-works that needs to be done right now is to suppress imports and focus on increasing the utilization of national steel industries in order to supply raw material needs for the downstream sector in the country,” said the minister at his office on Wednesday.

In order to reduce the flood of imported steel and iron products, Gumiwang claimed, the government is ready to provide protection for domestic industries. The policy is for example through the imposition of anti-dumping import duty, safeguards, and the application of mandatory Indonesian National Standards for steel products.

“Actually the national steel industry can supply up to 70 percent of domestic needs if capacity can be increased and the remaining 30 percent does not yet have its industry in the country,” he asserted.

Rising imports of steel products has hit state-owned steel maker PT Krakatau Steel Tbk (IDX: KRASS) and other local producers. For years, the steel maker has sent their complaint on these problem to the government but there is no solution until today.

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