Indonesia decides to use more local steel

Indonesia state firms operating on construction services are requested to use steel produced by the state company PT Krakatau Steel in a bid to use more local contents in massive infrastructure projects.

Indonesian State-Owned Enterprises Rini M Soemarno said on Monday that the policy is in part to boost synergy and integration among state firms following the injection of capitals by the government and to support the government effort to construct the infrastructure facilities to speed up economic growth.

PT Krakatau Steel on Monday inked a deal with six state firms operating on construction at the State Palace.

"It is a must now for our (state) construction firms, if they require steel and the steel can be produced by the Krakatau Steel, they must buy it from Krakatau Steel," Minister Rini said at the palace.

However, Indonesia's steel industry only has capacity of about 14 million ton annually, still short of 17.46 million tons compared with the country's annual steel demand to support the infrastructure projects, according to Industry Minister Saleh Husin.

The country plans to apply 15 percent tax to imported steel to protect domestic steel industry.

Indonesian President Widodo aims at over 7 percent economic growth at the end of his five year terms ended 2019 by constructing roads, railways, seaports, airports, bridges and other facilities.

The government has decided to inject about 40 trillion rupiah ( some 3.05 billion U.S. dollars) funds to infrastructure state firms to help fire up the economy. Endi