Ship manufacturers in Batam, Riau Islands, are urging the government to revise an antidumping regulation as it is could affect the competitiveness of local companies.

The controversial regulation in question is Finance Minister Regulation  No. 120/2017 on the mechanism of antidumping duties.

Since Jan. 25, the customs authority in Batam has been collecting levies from imported hot-rolled plates, mostly from Singapore, as well as from the end product using those raw materials.

Article 5 of the regulation stipulates that manufactured goods that are shipped from Batam to other parts of the country are subject to antidumping duties, among others.

Such a policy would reduce the local industry’s competitiveness against foreign competitors, and it could disrupt the business process, said Sarwo Edie Setijono, the chairman of the Batam Shipyard and Offshore Association .

He said shipyards, which had completed their shipbuilding work, could not immediately deliver their products to their customers as the customs authority would only provide clearance if antidumping duties had been paid.

“For example, the antidumping duty for a 300-foot barge can reach Rp 3 billion [US$210,763]. Customs and excise officers said if the duties are not paid, they will not release documents [authorizing the release of the ship from the customs area], which is the same as not allowing the ships to be delivered to customers,” Sarwo added.

So far, 20 companies, which are members of the association, could not fulfill their commitment to customers on time due to the policy, he said.
Sarwo argued that should the levies be collected, 110 shipyards in Batam would go bankrupt as they relied on imported hot-rolled plates from Singapore, which is cheaper.

The price of Singaporean hot-rolled plates are more competitive than the ones produced by Krakatau Posco, which is a joint venture between state-owned steel company Krakatau Steel and South Korean steel giant Posco, in Cilegon, Banten.

“We’re also quite puzzled as to why it [the price of hot-rolled plate] is cheaper in Singapore than the ones bought directly from Krakatau [Posco]. It probably has something to do with [high] logistics costs [in Indonesia],” he said.

Ali Ulay, the chairman of the Riau Islands chapter of the Indonesian Shipbuilding Association (Iperindo), said the government should offer more incentives rather than taking levies from the ship manufacturing industry, which is by nature labor intensive and highly competitive.

Responding to the concerns, Oke Nurwan, the director general of international trade at the Trade Ministry, said the government planned to revise the regulation.

In the planned revision, the government would allow shipbuilders in Batam to deliver their products to the domestic market without being charged duty fees, even though they used imported hot-rolled plates from Singapore as raw materials.

“The antidumping duties for hot-rolled plates will not be erased, but there should be equal treatment for ships manufactured in Batam with others that are built in, for example, Singapore, which enjoys zero import duties,” said Oke.

The 2017 regulation is a follow-up to Finance Minister Regulation No. 50/2016, which applies antidumping duties on imported hot-rolled plates from China, Singapore and the Ukraine.

The 2016 regulation has been in effect since April 2, 2016, but it has only recently been enforced by the customs authority.

Susila Brata, the head of the customs and excise office in Batam, said it had spent a year, between 2017 and 2018, disseminating the regulation to businesses. The authority had only recently enforced the regulation as it needed time to determine the best possible process to collect the levies, he added.

The Indonesian Anti-Dumping Committee (KADI) recently initiated a sunset review of the 2016 regulation, which will expire in April 1, following a request from Krakatau Posco and another steel maker, Gunung Raja Paksi.

Finance Minister Sri Mulyani Indrawati said her ministry would support any favorable policies geared toward domestic industries, including easing companies’ taxation burden -- including the antidumping duties -- in order to boost investment and exports.