T

he Trade Ministry has introduced a stricter regulation on tire imports in its bid to boost the domestic tire industry as part of the downstream rubber sector.

The new regulation, which will come into effect on Oct. 7, will require an importer to register as a Registered Importer (IT) and Producer Importer (IP), as well as to provide documents such as an import permit letter (SPI) and a recommendation from the Industry Ministry. The importers should provide the goods'€™ registration numbers (NPB) of its tires, an Indonesian National Standard certificate (SPPT SNI) and a tire type registration letter, among other things.

'€œThe reason is because the number of imported tires have been really high in recent years and analysts have said that it will distort the domestic market in several years. It will be hard to compete with the imported tires. We need to keep the local industry growing,'€ the director of imports from the Trade Ministry'€™s directorate general of foreign trade, Thamrin Latuconsina, said recently.

'€œThe number of imported tires can be minimized [with this regulation]. We expect a 2 to 5 percent decline in tire imports in the first year,'€ Thamrin added.

He also stressed the importance to boost the local downstream rubber industry, as the government previously aimed to increase local natural rubber consumption to 40 percent in the next five years from its current 18 percent.

Indonesia is the world'€™s second largest rubber producer after Thailand and before Vietnam, but demand has not matched a surge in supply over the past years since 2011 caused by slower economic growth in China.

Domestic industrial use of rubber is dominated by the tire industry, followed by manufacturers of rubber gloves and yarn, according to data from the Industry Ministry. However, the majority of domestic natural rubber is currently shipped unprocessed to overseas industries.

The Indonesian Tire Producers Association (APBI) chairman Azis Pane said that although the industry was capable of producing 65 million tires each year, there were only 50 million tires produced each year and 11 million tires that were absorbed by the domestic market.

He also said that the industry has seen declining domestic demand.

'€œThere has been a 24 to 30 percent decrease in the domestic demand for tires. If the situation remains like this, we might be forced to reduce our working hours and to possibly reduce our labor force by up to 50 percent,'€ Azis told The Jakarta Post recently.

Azis also claimed that with the overwhelming number of imports, the control over the legalities side had been insufficient.

'€œThe imported tires are booming,'€ he said, adding that some of the imported tires were of poor quality. '€œBut many of them are illegal, with false information on the place of origin of the imported tires, false SNI, unreliable paper works, to the false size of the tires.'€

Meanwhile, the chairman of the Indonesian Rubber Producers Association (Gapkindo), Daud Husni Bastari, warned of the availability of additional materials to produce tires in Indonesia apart from natural rubber. He urged the government to regulate the import of the additional materials or to establish their manufacturing instead.

According to National Statistics Agency (BPS) data, there has been a 22.24 percent increase in tire imports to 176,308 tons last year from 144,227 tons in 2013. (fsu)