Indonesian Iron and Steel Industry Association (IISIA) chief Fazwar Bujang has stated that the Indonesian steel industry may collapse in the near future if the government cannot negotiate more favorable conditions in relation to the free trade agreement between ASEAN countries and China, which will come on stream by January 1, 2010 for manufacturing products.
"If the government cannot provide protection, the industry may collapse within the next one to two years," Mr. Bujang said on December 1, pointing to the threat of excessive and cheaper Chinese exports to the country.
"The current import duty of five percent does not help much, not to mention if the tariff is cut to zero," Mr. Bujang commented, adding that the capacity utilization rate of the local steel industry stands at around 40 percent.
Indonesian Industry Minister M.S. Hidayat acknowledged that a delay of one to two years will be considered. "Afterwards, the industry must improve its performance to be able to compete with the Chinese products," the minister said.
If a delay is achieved, the minister said that he is convinced that the production utilization rate in the domestic steel industry will go up from 40 percent to 80 percent.