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I. General Information about Indonesia

Among the member states of the Association of Southeast Asian Nations (ASEAN), Indonesia has the largest land area, the largest population, and the highest GDP. Specifically, Indonesia's GDP accounts for more than one-third of the total ASEAN GDP, and its population accounts for 41% of the total ASEAN population. In addition, Indonesia is the world's largest archipelagic country, with a national population of 276.36 million, ranking fourth in the world. In 2021, Indonesia's apparent steel consumption was 15.46 million tons, ranking third among ASEAN countries.
According to data released by the Central Bureau of Statistics of Indonesia, in the first three quarters of 2024, Indonesia's real GDP increased by 5.03% year-on-year, 0.02 percentage points slower than the same period last year. Bank Indonesia (BI) predicts that despite challenges brought by geopolitical and global market fluctuations, the Indonesian economy will remain resilient, and its GDP will grow by 4.8% - 5.6% in 2025.

Indonesia occupies a pivotal position in the Southeast Asian region and is a core participant in regional economic cooperation. As a member of ASEAN (ASEAN), Indonesia is deeply involved in the negotiation and implementation of regional free trade agreements (FTAs), such as the Regional Comprehensive Economic Partnership (RCEP).

II. The Steel Industry in Indonesia

In the past, Indonesia's steel output was far lower than its steel demand, so a large amount of its steel demand had to be met through imports. However, in recent years, with the commissioning of new production capacity, Indonesia's steel output has been steadily increasing.
The Indonesian Iron and Steel Association (IISIA) predicts that considering the global steel development, especially in China, as well as the development of the Indonesian steel industry, based on the average growth rate from 2020 to 2024, Indonesia's national steel consumption (ASC) in 2024 will increase by 5.2% to reach 18.3 million tons. It is expected that the output and export volume will increase by 5.2% and 18.6% respectively, reaching 15.9 million tons and 7.1 million tons.
The Indonesian Ministry of Trade announced that in 2023, Indonesia has risen to the fourth position among the world's iron and steel exporting countries. In 2019, Indonesia ranked 17th on the same list. According to Trade Map data, in 2023, Indonesia accounted for 5.61% of the global steel exports. China is at the top with a market share of 14.57%, followed by Germany (6.95%) and Japan (6.42%).

Top 10 Steel Companies in Indonesia:

1. Krakatau Steel
   It mainly produces hot-rolled sheets, cold-rolled sheets, rebar and other products.
2. PT Gunung Raja Paksi (GRP)
   It mainly produces hot-rolled steel coils, steel plates and construction steel.
3. PT Dexin Steel Indonesia
   It focuses on billets, rebar and wire rods.
4. PT Indonesia Morowali Industrial Park (IMIP)
   It mainly produces nickel pig iron and stainless steel products, which are widely used in the global market.
5. PT Jindal Stainless Indonesia
   It mainly produces stainless steel plates and coils, and its products are sold in the global market.
6. PT Tsingshan Steel Indonesia
   It mainly produces stainless steel, nickel pig iron, etc., for use in multiple industries such as construction and manufacturing.
7. PT Indonesia Guang Ching Nickel and Stainless SteeIndustry (GCNS)
   It mainly produces stainless steel and nickel pig iron, and its products are exported to many countries including China.
8. PT Bhirawa Steel
   It mainly supplies steel products for the construction industry.
9. PT Hanwa Steel Service Indonesial
   Its products include hot-rolled steel, cold-rolled steel, stainless steel, etc., mainly used in the automotive and home appliance industries.
10. PT Ispat Indo
    It mainly produces construction and industrial steel products such as reinforcing bars, rebar and wire rods.

III. Indonesia's Steel Import Policy

Indonesia is one of the world's major steel importing countries, and it is expected that Indonesia's domestic steel consumption will further increase in 2024. The area with the largest steel consumption in the country is infrastructure construction. In the Indonesian government's infrastructure construction policy, the construction of highways, railways, ports, airports, etc. will consume a huge amount of steel.
To promote the development of its domestic steel industry, the Indonesian government has implemented a steel import quota system. This system sets a certain import quota for importers, that is, only a specific amount of steel is allowed to be imported within a specific period. The determination of the quota is mainly based on Indonesia's domestic demand and the government's development plan for the steel industry, and it will be adjusted annually according to the actual situation.
Applying for Indonesia's steel quota involves multiple steps, including applying for a recommendation letter from the Ministry of Industry, submitting the recommendation letter online to the Ministry of Trade, submitting relevant documents to the designated institution, and paying the inspection fee. It should be noted that since the purpose of Indonesia's steel import quota system is to protect the domestic steel industry, the application process may be subject to some policy restrictions, such as increasing tariffs and strengthening the review of import applications. Therefore, trading and construction companies should thoroughly understand Indonesia's relevant policies and regulations before applying to ensure the smooth application for the quota.

IV. Steel Demand in Indonesia

The construction industry is the main industry driving the growth of steel demand in Indonesia. Steel consumption in the construction industry accounts for 78% of the country's total steel consumption. Due to Indonesia's large number of ongoing infrastructure projects and growing housing demand, its construction industry developed well in the 10 years before the COVID-19 pandemic. The current Indonesian government attaches great importance to infrastructure construction. Since 2015, the government has allocated a large proportion of its budget (14.25% in 2022) to the country's infrastructure projects every year. As part of Indonesia's "Mid-Term National Development Plan 2020 - 2024 (RPJMN)", the government is committed to developing various transportation infrastructure projects to support economic growth. At present, Indonesia has at least 41 strategic priority projects, and the total indicative fund is expected to reach 426billionby2024.Inaddition,theIndonesiangovernmentplanstorelocatethecapitaltoNusantara,whichisexpectedtocost466trillionrupiah(about32.4 billion), making it one of the most important infrastructure projects in Indonesia's history.
The automotive industry is defined as one of the country's five priority manufacturing industries. At present, Indonesia has become the second-largest automotive manufacturing center in ASEAN after Thailand, so its automotive industry has very good development prospects. The Indonesian automotive industry is mainly driven by foreign direct investment, especially foreign direct investment from Japan, which accounts for 75% of the total foreign direct investment in the country's automotive industry. Indonesia's huge domestic market potential and competitive labor costs are two other factors attracting foreign direct investment into the country's automotive industry.

V. Prospects for Steel Demand

Driven by the grand new capital construction plan and the growing housing demand, Indonesia's construction industry will continue to drive a reasonable increase in steel demand. The new capital, Nusantara City, will be built 800 miles away from Jakarta, and it will also become the largest infrastructure project in the country's history. Purwono Widodo, the chairman of the Indonesian Iron and Steel Association, said in July 2024 that the development of Nusantara City will require 9.5 million tons of steel. He predicted that the first phase of the project will use 500,000 to 700,000 tons of steel, and an additional 1 million tons will be added for each new phase. The Indonesian Iron and Steel Association is working with the Ministry of Public Works and Housing to ensure the supply of a large amount of steel required for the construction of the new capital. Indonesia's manufacturing industry is also expected to show a stronger growth momentum. By releasing the potential of the domestic market, developing the electric vehicle industry by leveraging natural resource advantages, and increasing export orientation, Indonesia's automotive industry will become another important engine driving the growth of its steel demand. Therefore, Indonesia will be one of the emerging ASEAN countries driving the growth of steel demand in the ASEAN region.

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