“Krakatau Steel has to fundamentally change its management and improve its technology,” Kalla said on Tuesday as reported by tempo.co, adding that with a total debt of Rp 30 trillion (US$2.12 billion), Krakatau Steel’s financial difficulties were quite severe.  

He pointed out that Krakatau Steel had not been able to resolve a long-standing problem, namely the old technology it used. “The technology is too old and is rivaled by China, [which produces steel at] lower prices. So Krakatau Steel cannot compete,” he said.

He said the government had to help state-owned enterprises, including Krakatau Steel, but it did not mean that the government had to pay off their debts because it had its own debts.

Krakatau Steel is in the process of restructuring and has transferred about 2,000 employees to its subsidiaries. Up to the first quarter of this year, Krakatau Steel’s losses increased more than 1,000 percent year-on-year (yoy) to $64 million, while its revenue slumped 13.82 percent yoy to $418.98 million.

Indonesian Iron and Steel Industry Association (IISIA) executive director Yerry Idroes said local steelmakers could not compete with imported products, particularly those from China.

“Statistics Indonesia recorded that from January to March, imports of iron and steel grew 14.75 percent year-on-year to $2.76 billion. [Steel and iron] imports were the fourth-largest [among other commodities],” he said recently.

Meanwhile, the South East Asia Iron and Steel Institute (SEAISI) recorded that Indonesia’s steel imports in 2018 reached 7.6 million tons worth $10.25 billion, representing 6.45 percent of the country’s total imports. (gis/bbn)

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