The Association of Metalworking and Machinery Industries of Indonesia (Gamma) has revealed significant challenges faced by the basic metal industry in supporting the growth of manufacturing export performance this year.

Despite the metal industry being the largest contributor, with a value of US$42 billion (IDR 602.04 trillion) out of a total manufacturing export of US$186.98 billion (IDR 2,674.41 trillion), the government through the Ministry of Industry is targeting a non-oil and gas manufacturing export value of US$193.4 billion (IDR 3,038.5 trillion) in 2024.

“The government's target is quite aggressive given the various challenges faced by the processing industry, especially basic metals," Gamma chairman Dadang Asikin said on Thursday, March 14, 2024.

In this regard, Dadang cited the main challenge at the beginning of 2024 that has affected the metal industry, which is the Carbon Border Adjustment Mechanism (CBAM) policy by the European Union (EU). The policy, which came into effect on January 1, 2024, has a significant impact on the domestic steel industry as more European countries halt imports of steel and other basic metal products from Indonesia.

"While we know that the basis of our metal processing uses coal, which undoubtedly emits emissions," he said.

According to him, this will add pressure or obstacles to boosting Indonesia's metal export performance. Although the volume of steel exports to Europe is relatively small, this situation still needs to be addressed.

The export of steel products to the European Union amounts to 975,000 tons or only about 7 percent of the total export volume. In terms of value, national steel product exports to the EU reach US$1.04 million (IDR 14.86 billion), accounting for only 4 percent of the total steel product exports.

"We still have to respond to this in the future, even though currently the percentage of our metal exports to the European countries is small compared to the total national steel exports," he said.

In this condition, Dadang urged the government to provide support in the form of facilitation to transition to zero-emission technology. This is considered important so that the industry can face global challenges and break through evolving barriers while still maintaining competitiveness.

"Perhaps a series of incentives need to be considered and offered by the government, maybe the government needs to consult with industry players," he said.