Posted by: mel | December 3, 2009

ASEAN-China FTA to threaten RI steel, textile industries

ANTARA News | Jakarta | Economic & Business | 3 December 2009

Indonesian steel and textile industries will be threatened if the ASEAN-China Free Trade Agreement (FTA) is introduced in January 2010, an industry spokesman said.

Since January 2000, Indonesian steel makers had been suffering a sharp trade deficit because they lost to foreign competitors, Executive Director of the Indonesian Association of Iron and Steel Industries (IISIA) Hidayat Triseputro said here on Wednesday.

“Although the government currently imposes a 5 percent tax on imported steel, the domestic steel industry is still facing difficulties. After the FTA is introduced and the import tax is abolished, the Indonesian steel industry may collapse,” he said.

In the past five years the Indonesian steel makers had difficulties expanding their business because they lost to foreign competitors, particularly from China, he said.

He said lack of supporting factors, such as competitive transportation costs, short delivery times, low container rents, and low electricity tariffs had made Indonesian steel industry products unable to compete with Chinese products.

“The high cost of the steel industry`s supporting factors make the prices of the Indonesian steel product uncompetitive,” he said.

Citing an example, he said, Indonesia`s export of steel of HS-72 and HS-73 types to China continued to fall while its steel imports from China rose sharply.

He said the application of the FTA which abolishes tax on imported steel would put a further strain on the domestic steel industry.

He asked the government to postpone the signing of the FTA on the grounds it would harm a number of industries, particularly steel industry.

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