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