Camouflaged Steel Imports
Steel imported allegedly for the long-completed government projects is harming the local steel industry.
THE trade ministry must immediately scrap all kinds of exemptions in the steel import regulations for government’s construction projects. The laxity of import requirements has proven to have caused more harm than good for the country. Steel imported under shady deals and gradually made its way to the domestic market put the pressure on the national steel industry.
The leaked news of steel imported for government projects is not a tall tale. At the end of last February, the customs office withheld dozens of containers containing imported metal and steel belonging to several companies. Armed with letters from the trade ministry claiming that the goods were for national projects, the importers managed to secure exemptions. They did not need import approval or surveyor’s inspection.
The problem is that the projects in question have long been completed. One of the projects cited as a cover is the construction of road and bridges in the second segment of the Solo-Kertosono toll road. The project was wrapped up in January, 2018. But oddly, two years later, Jaya Arya Kemuning still asked for exemptions using the procurement agreement of 2016 between Jaya Arya Kemuning and Waskita Karya, the toll road project owner, as a reference. With the exemption, the importer was exempted from all the import requirements stipulated in the Trade Minister Regulation No. 3/2020.
This practice begged the question of why the trade ministry still gave the import exemption for the project that no longer existed. It is difficult to rule out the possibility of foul play. Without the help of ministry’s officials, the importer could not possibly garner a myriad of privileges, even more so when the Solo-Kertosono toll road is not the only project used as a ruse for murky imports.
Other importers, namely Duta Sari Sejahtera and Prasasti Metal Utama, also used the same modus operandi by presenting exemption letters issued by the trade ministry for import during the period 2019-2020. Duta Sari is a construction material supplier for the Batang-Semarang toll project whereas Prasasti Utama was involved in the flood prevention project on the Semarang River. The two projects were inaugurated in December 2019 and June 2019 respectively. Imports that took place after the projects were completed give a strong signal that steel and steel derivatives were imported specially to be sold in the domestic market clearly destabilizing the local steel industry
The government actually stipulates the use of local steel for infrastructure projects. Some ministers even vigorously heralded the use of local steel. Unfortunately, the country’s strategic industry only received half-hearted protection. The government is not consistent in enforcing that policy as it still leaves exceptions for steel import for state projects.
The dualism in the policy is what creates loopholes for illicit deals and gives birth to rent seeking opportunists. With access to information and power, they ride on the disorderly and complex import regulations to commit frauds. The industry must pay the price for their deceitful acts but ultimately it is the national economy that is undermined.
The government must immediately put the lid on dubious steel imports. All kinds of import exemptions for government construction projects should be removed from the steel trading system. Without these initiatives, imported steel will drive local steel producers to bankruptcy at the time the government is intensively carrying out infrastructure development around the country.