T

he government has introduced a safeguard duty on imported flat iron and steel to counter a sharp increase in shipments into the domestic market.

The measure is set to last for three years, from July 22 this year to July 21 in 2017, according to a Trade Ministry press statement distributed on Monday.

In the first year, the products will be levied Rp 4.99 million (US$424.28) per ton, while Rp 4.31 million and Rp 3.63 million will be charged in the second and third years, respectively.

The imposition of the punitive duties has been taken as an official investigation discovered causal links between an influx of imported products and losses suffered by the domestic industry, according to Indonesian Trade Security Committee (KPPI) chairwoman Ernawati.

'€œOur investigation has concluded that a significant surge in imports caused serious injury to the businesses of the petitioners,'€ Ernawati said, citing a decline in market share and business profits of two firms.

The local industry is represented by two petitioners, namely PT BlueScope Steel Indonesia and PT Sunrise Steel.

A safeguard measure is a mechanism under the World Trade Organization (WTO) that allows a government to protect its domestic industry from unusual surges in imports of similar products from trading partners.

The measure usually comes by way of punitive duties or import quotas implemented for a few years.

The KPPI began the investigation into the case on Dec. 18, 2012, based on complaints by BlueScope Steel and Sunrise Steel, which claimed serious injury in their businesses driven by a jump in imports.

The result of the probe showed absolute rises in the import volume of the products between 2008 and 2012, averaging 42 percent each year from 79.279 tons in 2008 to 251.315 tons in 2012.

The safeguard duty will affect key supplier nations, most notably Vietnam, Taiwan and South Korea. Vietnam exporters dominated the share of imports in the Indonesian market with 60.04 percent in 2012, followed by Taiwan (21 percent) and South Korea (15.22 percent).

Iron and steel products are vulnerable to trade disputes worldwide. Indonesian producers like state-owned PT Krakatau Steel have repeatedly been accused of dumping their products in export markets.

Similarly, Indonesia also applies similar charges to foreign producers. The KPPI is now probing a jump of several alloy steel imports, which has allegedly led to injury to the domestic industry as represented by the complainant, major local steelmaker PT Gunung Garuda.

Indonesian Iron and Steel Industry Association (IISIA) vice chairman Irvan Kamal could not be reached for comment. BlueScope Steel public relations officer Wida Sulistomo also did not respond to The Jakarta Post'€™s inquiry about the issue.