Indonesia’s steel industry is growing in line with the economy. However, the Indonesian government hopes that the domestic industry will continue to expand in order to reduce dependence on imported steel, Kallanish notes.
The Indonesian steel industry expanded by 10.86% year-on-year during the third quarter, Coordinating Minister for the Economy Airlangga Hartarto recently said at the Indonesia Iron & Steel Industry Association Business Forum last week at Tangerang.
“The demand of 1.5 million tonnes for the automotive industry is a potential that we can exploit because only 900,000t of automotive steel needs have been met by national steel producers,” he said at the Forum. “It is hoped that the steel industry can ‘fly’ to generate more foreign exchange for the country,” he said. The value of national steel exports rose to $28.48 billion from around $8 billion in 2019. National steel consumption reached 16mt but this was only met by 12mt of locally produced steel, he said. This shows that the opportunity for the Indonesian steel industry to grow is still very large.
There is also scope for Indonesian steel producers to benefit from the government’s incentive program, which provides exemption of value added taxes for low-priced housing. “Houses under IDR 2 billion ($128,565) are covered by the government with 100% VAT, therefore the construction sector is motivated to increase production,” he said.
Leading steel producer, Dexin Steel recently expanded its crude steel capacity to 7m t/y from 4m t/y at its integrated steelworks located at Central Sulawesi in September. According to a letter of intent signed in 2020, the steel producer plans eventually to boost total steel capacity to 20m t/y.
