The Indonesian Iron and
Steel Industry Association [IISIA] predicted national steel consumption to be
stagnant. However, IISIA could not predict growth of steel industry precisely as
the USD exchange rate value against Rupiah was determinant but unpredictable.
National production output also depended on Government’s effort to facilitate
national steel industry. The Government could give incentive to domestic steel
industry for example by minimizing production cost.
Fazwar Bujang, Chairman of IISIA, stated in Jakarta on
Monday [16/12] if the Government offered incentive to national steel
utilization could reach 15%, which would strengthen resistance against
turbulence. “However, we dare not to speculate too far, because national steel
consumption is presently still stagnant” Fazwar remarked.
Fazwar admitted that to increase capacity of domestic
production, national iron and steel industry was still handicapped at the
upstream and downstream sectors. Market growth was fast, by quantity as well as
diversity. Somehow the iron and steel industry was still not as expected. For
the most part, Indonesia’s steel industry was weak at the upstream sector.
Fazwar also asked the national iron and steel industry to
strengthen their position in anticipating the AEC 2015. Therefore, Fazwar said,
Government’s support was needed to promote the industry, among others through
banking facilities for obtaining capital. On the downstream side, the Government
needed to adopt a policy to motivate the domestic industry to use local made
steel.
He believed that to compete in the open market,
strengthening of competitive edge was indispensable by way of maximizing use of
steel from local resources. If there was any Government policy to encourage use
of local steel for local projects, it would enhance cost efficiency and
eventually increase competitiveness.
In 2012, he said, demand for steel at national level came
to 13 million tons per year; meaning average national steel consumption was 40
kg per capita per year. This figure was still way below that of developed
countries which was 600 kg per capita on the average per year. However, he
projected national steel consumption would increase to 100 kg per capita per
year in 2020. Assuming Indonesia’s population was 250 million, total
consumption of national steel in 2020 would be 25 million tons per year.
Meanwhile the Director General of Basic Manufacturing
Industry, Ministry of Industry Benny Wachyudi admitted supply of domestic iron
and steel had not met all the need of domestic market so certain type of steel
still had to be imported. He said that various policies needed to be adopted so
as not to hindrance industrial activities which still needed imported raw
materials.
Benny
said that beside under supply of products from the domestic industry, other
problem was products made with specifications different from demand, or there
were demand for products not produced at home. Benny disclosed that national steel
industry at the downstream sector was growing faster than the upstream sector
causing supply of domestic raw materials for intermediate and downstream sector
to be insufficient. Therefore solution was needed but still prioritizing
national interest in the broadest sense of the word.
Business News - December 20, 2013
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