Indonesian Institute of Sciences (LIPI) Chief Prof Lukman Hakim said here on Monday that the implementation of the ASEAN-China Free Trade Agreement would speed up steel imports from China.
Therefore Lukman said Indonesian steel industry currently facing various problems is now try harder to compete with Chinese steel producers.
"The problems being faced by Indonesian steel industry included an increase in production costs due to rising raw material and energy prices, inadequate infrastructure, and the lack of incentives for new investors in the sector," he said.
Lukman explained that Chinese steel production was currently experiencing a surplus, and therefore Indonesian steel producers should try harder to compete with China.
Meanwhile, head of LIPI economic research center Darwin said the implementation of ACFTA would accelerate steel imports from China and it would have a significant impact on Indonesia`s domestic steel industry.
Referring to data from the Department of Industry, Darwin said ACFTA had been predicted to increase steel imports from China by 170.8 percent.
"That big leap has occurred from 0.6 million tons in 2009 to become 1.5 million tons in 2010," Darwin said.
He said that according to data from the World Steel Association, China was the world`s largest steel producing country, and even in the global financial crisis from 2008 to 2009, steel production in that country grew by 13.5 percent.
"China produced 567.8 million tons of steel in 2009, while Indonesia only 7 million tons per year," he said. (*)
Editor: Aditia Maruli Radja
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