Indonesia has decided to re-impose a duty on ceramic tiles shipped from India and Vietnam next Tuesday after the foreign producers managed to carve out a significant share for themselves in Indonesia ceramic tiles market.
Febrio Nathan Kacaribu, the head of fiscal policy office at the Finance Ministry, said on Friday that the tiles importers would be liable to pay a 23 percent safeguard measures import duty (BMTP) for the next twelve months. The duty would drop to 21 percent and 19 percent in the second and third years, respectively, he said.
Indonesia removed ceramic tiles from India and Vietnam from the BMTP list several years ago. Since then, imports from the two countries have grown to pose a threat to local ceramic tile producers.
“Based on the evaluation of the Trade Ministry in December 2019, imports of ceramic tiles from India and Vietnam in the 2018-2019 period jumped by 22.72 percent and 6.58 percent respectively,” Febrio said in an official statement.
Febri said the government intended to protect domestic ceramic tile makers and see them meeting most of the local demands.
Indonesia has the capacity to produce 580 million square meters of ceramic tiles per year, the fourth-largest in the world after China, India, and Brazil, according to data from the Indonesian Ceramics Industry Association (Asaki). However, the industry’s constant battle with high domestic gas prices often undermines local ceramic makers’ competitiveness against foreign producers.
“With the implementation of this duty, the government is committed to supporting the domestic industry, especially the ceramic tile industry, to be able to compete against imported products flooding the domestic market,” Febrio said.
He said the new duty still complied with the international trade provisions under the World Trade Organization (WTO). Under the agreement, a country can impose safeguard import duty when the imported products’ market share has exceeded three percent of the market in the country. In the Indonesian ceramic tiles market, Indian and Vietnamese tiles have already exceeded that threshold, Febrio said.
Indonesia has been actively supporting the ceramic industry in a more high profile way in the last 18 months, with the gas industry also under pressure to keep prices competitive.
The energy ministry in April lowered the price of natural gas sold to power plants to $6 per million British thermal units (mmBtu) from $8.40.
This is even though the price cap has created hurdles for a few gas projects, namely one with Repsol, which last year announced Indonesia’s biggest gas discovery in 18 years.
“We are having a tough discussion… we are determining whether (the project) can continue or not,” Arief Setiawan Handoko, deputy head of finance at SKK Migas, told a virtual conference.
“The price should not be more than $6, even though according to contractors, the economic price is above $7,” he added.
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