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[News] Investing Steel In Indonesia Will Be Very Attractive In Years To Come
Posted at: 20 October 2017

According to The Jakarta Post, Indonesia's Investment Coordinating Board (BKPM) hopes to attract Rp 863 trillion (US$64.6 billion) in foreign direct investment (FDI) in 2018, a 27 percent increase from the 2017 goal of Rp 678.8 trillion amid the global race to be the most attractive investment destination in the world.

The Indonesian Iron & Steel Industry Association (IISIA) says Indonesia is in big need of investment in the steel industry in order to expand the nation's steel production capacity. In the years ahead, steel demand is expected to rise strongly in Indonesia on the back of construction and infrastructure projects. Without investment, Indonesia will become increasingly dependent on steel imports.

In full-year 2016 Indonesia consumed 12.7 million tons of steel. However, domestic manufacturers could only produce 6.8 million tons, implying nearly half of Indonesia's steel demand needs to come from abroad, particularly China where a chronic steel oversupply led to attractive prices.

Considering Indonesia is focused on infrastructure development, domestic steel demand in Southeast Asia's largest economy is estimated to rise to 21.4 million tons by 2025 This means there exists a very interesting steel market in Indonesia that can be tapped by domestic players. 

The construction sector of Indonesia is the biggest steel consumer. This sector accounts for 78 % of total steel consumption in Indonesia, followed by transportation (8 percent), oil & gas (7 percent), and machining (4 percent).

(Source: The Jakarta Post and Indonesia Investment)