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Linda Yulisman

The Jakarta Post

Publication Date : 21-03-2013

The Indonesian government has placed anti-dumping duties on steel imports from five countries to offset material injury on the local industry caused by dumped products.

The additional import duties would be levied on cold rolled coil and sheet from China, Japan, South Korea, Taiwan and Vietnam, and would be valid for three years, Astera Primanto Bhakti, head of the state income policy centre at the Finance Ministry’s Fiscal Policy Agency (BKF) said on Wednesday.

“The finance minister signed the regulation on March 19 and it will be implemented within a few days,” he told The Jakarta Post over the telephone.

The anti-dumping duties would comply with a proposal from the Indonesian Anti-Dumping Commission (KADI), which was approved by the Trade Ministry, Primanto added.

The anti-dumping duty will range between 5.9 per cent and 55.6 per cent, as requested by KADI.

The additional duty that will be imposed on Japanese companies such as Nippon Steel Corporation, Japan’s largest steel maker, and Sumitomo Metal Industries Ltd. will stand at 55.6 per cent, which is the highest level requested by the commission. The lowest duty will be 5.9 per cent, set to be charged on Taiwan-based SYNN Industrial.

Dumping, in which producers sell its products overseas at prices lower than in their home markets or below their production costs, is classified as an unfair trade practice by the World Trade Organization (WTO).

WTO members are authorised to charge anti-dumping duties, which serve as an addition to regular import tariffs in a bid to compensate material injury on the local industry caused by imported products.

KADI initiated its probe into the cold rolled coil and sheet case in June 2011 based on a request by Indonesia’s biggest steel maker, Krakatau Steel, which claimed it suffered considerable losses from unfair competition from imported steel sold at lower prices in the local market.

Based on its investigation, the commission found strong evidence that imported steel items were dumped onto the local market and caused significant injury to the petitioner.

Earlier, KADI recommended that the duties go as high as 74 per cent, but later opted for duties to be calculated based on a lesser duty rule. Under the rule, the authority can apply duties at a level lower than the margin of dumping if that level suffices to lift the injury.

KADI chairman Bachrul Chairi said the lesser duty rule was applied because it could adequately accommodate the interests of the local industry.

“With the duties, we have given sufficient protection to the domestic industry by creating a platform for fair competition,” he told reporters at the House of Representatives.

Economists have long voiced concerns over the government’s reluctance to utilise a variety of trade remedies permitted under the rules of the world trade governing body.

Indonesia Institute of Sciences (LIPI) economist Latif Adam welcomed the government’s move to impose anti-dumping duties on steel products that hurt domestic manufacturers, saying that it would improve the credibility of the authority.

“We’ve seen indications of surging foreign direct investment in the steel industry. The measure against unfair trade will stimulate overseas investors to pour their investments in Indonesia,” he told the Post.

Steel products have become the subject of dumping, with local products also often facing duties imposed by Indonesia’s trade partners.

Indonesia has stepped up its fight against steel-dumping from foreign countries as the local market has been flooded by foreign steel products amid weaker demand from Europe.

In October last year, the Finance Ministry imposed anti-dumping duties on hot-rolled iron and steel plates from China (10.47 per cent), Singapore (12.33 per cent) and Ukraine (12.5 per cent) following a request from KADI.