Jokowi aims to strengthen local iron and steel industry to curb imports

Posted on 13 February 2020

Source: The Jakarta Post

President Joko "Jokowi" Widodo has instructed his Cabinet members to increase the availability of raw materials for the steel and iron industry to support infrastructure development while slashing imports.

He expressed his concern during a limited Cabinet meeting on Wednesday, saying that steel and iron, as the third-largest import products in the country, contributed the most to the trade deficit.

"We cannot allow this to keep on happening. We need to push for the steel and iron industry to become competitive and optimize its production," Jokowi said at the Presidential Palace in Jakarta.

Imports of iron and steel amounted to US$10.39 billion last year, slightly up 1.42 percent year-on-year (yoy), Statistics Indonesia data show. Despite recording relatively small growth, iron and steel products are the only Indonesian import commodities that saw an expansion during the period, which otherwise saw an overall contraction of 6.3 percent yoy in non-oil and gas imports.

Jokowi then revealed plans to boost raw material availability to support the local steel and iron industry.

"First, we need to improve the ecosystem of raw materials in the steel and iron industry, starting with their availability, as well as with price stability and gas prices," Jokowi said. "We also need to prioritize the supply of raw materials from the national mining industry."

He also called for a review of several regulations related to scrap metal while paying attention to environmental sustainability.

Jokowi, a former businessman, further asked the energy minister to immediately regulate gas prices for industries at US$6 per million British thermal units (mmbtu).

"I asked for better calculations regarding the impact of steel imports on the quality and price competition with domestic steel," the President told his ministers. "Lastly, utilize the non-tariff policy such as the SNI [national standard implementation] to protect the domestic steel industry.”

Industry Minister Agus Gumiwang Kartasasmita explained later after the meeting that the country actually imported materials that could not be produced or could not be fulfilled by local industries.

“Please don’t always see imports as a negative thing, as they can bring added value to the industry itself,” he said, adding that the government would continue to protect the national steel industry. 

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