Seven local Indonesian ceramics companies forced to close down and suspend production

The Ministry of Industry (Kemenperin) noted that seven ceramic tile companies have closed down or gone bankrupt, due to the impact of rising gas prices and the large imports of ceramic goods from China.The Chairman of the Ministry of Industry's Working Group for the Development of the Ceramic and Glass Industry said the local ceramic industry has been declining in competitiveness due to the increase in the price of natural gas, and that although it was successful until 2015, when the competitiveness of the companies was high, even with a utilization rate of 90%, it started to go downhill after that, and the companies were very uncompetitive and could not compete on price, and that the situation has been worsened by the arrival of cheap imported products.The surge in ceramic tile imports flooding the domestic market, especially from China, affected seven ceramic tile industry companies, causing them to shut down production. Eventually in 2016 the Ministry of Industry started to encourage the implementation of international trade barriers through trade remedies such as the implementation of the Safeguard Measures Import Duty (BMTP) as well as the Anti-Dumping Import Duty (BMAD) to protect the domestic ceramic industry. The following is a list of seven ceramic tile companies that have stopped production: PT Indopenta Sakti Teguh, PT Indoagung Multiceramics Industry, PT Keramik Indonesia Assosiasi - Cileungsi, PT KIA Serpih Mas - Cileungsi, PT Ika Maestro Industri, PT Industri Keramik Kemenangan Jaya, PT Maha Keramindo Perkasa

The Indonesian Anti-Dumping Commission (KADI) has recommended the imposition of BMAD on imported ceramic tiles originating from China with a maximum tariff of 199.98% to protect the domestic ceramic industry. The Institute for Economic and Financial Development (INDEF) assessed that the implementation of the BMAD recommendation will have some negative impacts. The head of the Center for Industry, Trade and Investment (CITI) said that if the BMAD is implemented based on the KADI findings, the impact will be that first of all trade diversion will take place and imports will be shifted to countries other than China. There is a considerable shift to India and Vietnam as they are the two largest exporters. The second impact is that competitive markets are getting smaller, consumers have fewer choices, and ceramics are getting more expensive. As the import price of ceramics rises sharply, domestic producers will increase their profit margins by raising their selling prices. On top of that, the fewer ceramics that are actually available on the market, the higher the price consumers will receive when domestic demand for ceramics increases. Domestic producers will increase their profitability by increasing their selling prices as the price of imported ceramics increases dramatically. The third is that many industries will be affected, including retail, the real estate industry, importers, freight forwarders, and logistics, which will likely increase unemployment. The fourth impact is the fear that China will retaliate, retaliation is a retaliatory action taken by a country against a country that has caused harm to it, what may happen is that China will retaliate against Indonesian products.

This comes after the Chairman of the Ministry of Industry's Working Group for the Development of the Ceramic and Glass Industries revealed that the country's ceramic industry has a longstanding performance problem. The problem started in 2015 when the price of natural gas began to rise, which led to a decline in the performance of the ceramics industry and even made it less competitive. The local ceramics industry has been declining because of the competitiveness due to the increase in the price of natural gas, which was high before 2015, with utilization rates even reaching 90 percent. The influx of imported ceramics has made the local ceramic products more and more inferior because the imported ceramics are cheaper. Cheap imports have made the situation worse, and Indonesian consumers remain concerned about prices. The Ministry of Industry finally started to encourage the implementation of international trade barriers through trade remedies in 2016, such as the implementation of the Safeguard Measures Import Duty (BMTP) as well as the Anti-Dumping Import Duty (BMAD) to protect the domestic ceramics industry.