JAKARTA (REUTERS) – Indonesian trade groups want the government to increase Chinese steel tariffs to curb low-priced imports, as Southeast Asia's leading steel producer said its restructuring would bring big layoffs.
Thousands of workers from Krakatau Steel, a state-controlled company, protested last week near a production plant in Cilegon, on the west coast of Java, after announcing plans to cut 30% of its workforce by 6,264 per stage until 2020, Indonesian media said.
Apart from the job cuts, Krakatau Steel said he will sell non-core assets and run some units to improve his financial condition.
The turbulence in the sector comes despite the boom in infrastructure investment by the government in recent years, with groups of companies accusing imported steel as the main factor responsible for pressure.
"For us, the most important thing is to protect the national industry so that we do not die, applying high tariffs," said Didi Aulia, head of construction activities of the Indonesian Chamber of Commerce (11 July).
The Indonesian Association Iron & Steel (IISIA) said that most of the imports come from China, adding that Beijing has given tax incentives to steel producers to increase their competitiveness.
"Once (steel) arrives here, without paying import taxes," said Teguh Sarwono, an official of the association who is also the commercial director of Krakatau Wajatama, a subsidiary of Krakatau Steel.
Although the domestic Indonesia industry produces 17 million tons of steel per year, only 57% was absorbed by the market, Sarwono told Reuters. Half of the domestic demand for 20.3 million tons is supplied by foreign countries.
The quality of imports was low, but "for contractors here, what matters most is that they are cheap," he said, adding that the use of such buildings or infrastructures made of steel is more vulnerable to frequent earthquakes in the archipelago.
Indonesia has imposed anti-dumping duties on different types of steel from China and other countries, but the association has accused foreign manufacturers of altering product specifications to avoid them.
The government could penalize the goods produced through unfair commercial practices, said Bambang Adi Winarso, deputy minister of coordination of economic affairs, but questioned the efficiency of the national industry.
"If there is no question, there will be no imports," added Winarso. "But if the problem is the price, it could be related to internal inefficiency that makes us uncompetitive."
Krakatau Steel has accumulated losses every year since 2012, the figures for Efinon's Refinitiv shows. In the first quarter, the company recorded a net loss of US $ 62.3 million (S $ 84.5 million), a jump from a loss of US $ 4.9 million in the corresponding period of 2018.