Client: Department of Foreign Affairs and Trade  (DFAT) of Australian Embassy

In 2017, with support from the Department of Foreign Affairs and Trade (DFAT), Australia, Svara Institute (formerly Presisi Indonesia) conducted an assessment on the potential impacts of limited liberalisation for some specific products of steel in Indonesia. Specifically, we analyse the impacts of reducing tariffs on three flat-rolled steel products from Australia for Indonesia’s steel industry and economy more broadly. The three products under this study include the following HS codes: (1) HS 7208.39.90; (2) 7209.17.10; and, (3) 7209.18.99.

Our assessment indicates that reducing tariffs on Australian steel products would yield economic gains to Indonesia, while the resulting tariff revenue losses would be rather small. In addition, the impact of strategic tariff liberalisation on domestic producers, particularly Krakatau Steel, would be insignificant. Our assessment indicates that the overall welfare gains to Indonesia outweigh the costs.