KPPI starts probe into alloy steel imports

JAKARTA. The Indonesian Trade Safeguard Committee (KPPI) is investigating an influx of several alloy steel imports, citing potential losses to the domestic industry.

KPPI chief Ernawati said on Friday that the probe was in response to a complaint filed by local steel producer PT Gunung Garuda, which had reported an injury to its business due to a significant surge in imports during the past few years.

“The request [for an investigation] is based on the claim that the petitioner experienced a serious injury or threat of a serious injury caused by a rise in imports of the product, from which [the petitioner] is seeking protection,” she said.

A preliminary inquiry by the committee into the case found initial evidence that an increase in imported alloy steel products between 2010 and 2013 potentially hurt the firm’s business.

The import figure for the steel products in question amounted to 14,450 tons in 2009, and it relentlessly kept rising to hit 348,477 tons in 2012. 

The figure continued to climb dramatically last year, totaling 243,928 tons in just the first half of 2013.

“The surge in imports negatively impacted the firm’s business, as indicated by its performance in terms of production, domestic sales, number of employees, stock price, utilized capacity, profits and market share,” Ernawati explained.

The government is authorized to place a provisional safeguard measure on imported products under investigation, at the latest 200 days after the KPPI initiates an official investigation in accordance with World Trade Organization 
(WTO) rules.

Thereafter, it may impose a safeguard action, such as a temporary restriction on imports of the products in question, if the imports are proved as causing or threatening to cause serious injury to domestic businesses.

The launch of the KPPI’s investigation marks the government’s improved efforts to fight imported products allegedly sold domestically according to unfair trade practices.

Previously in August last year, the Industry Ministry requested the Trade Ministry to curb an influx of certain alloy steel imports, which it claimed caused potential losses to local producers due to unfair trade practices.

The request followed a number of complaints by local steel makers who witnessed a jump in steel imports that had been flooding the domestic iron and steel market since 2009.

According to the reports, the importation of steel alloyed with low boron content offered importers a loophole to avoid regular import, anti-dumping and safeguard duties imposed by the government.

Non-alloy steel products are subject to all three duties, while steel with low boron content enjoys lower or zero duties.

Imported steel products are subject to import tariffs that can reach 15 percent, and any additional duties make the products less competitive compared to similar items produced domestically.

Gunung Garuda chairman Djamaluddin Tanoto declined to respond to The Jakarta Post’s inquiries about the issue. (Linda Yulisman)