Jakarta. The government is encouraging foreign and domestic investment in the steel sector to reduce Indonesia’s heavy reliance on imported steel, Deputy Industry Minister Faisol Riza said on Monday.

Speaking after a hearing with the House Commission VI at the Parliament Complex in Jakarta, Faisol said the ministry has been in talks with potential investors from Europe, China, and Vietnam who have expressed interest in setting up production facilities in Indonesia.

“We’ve asked them to invest and build plants here, so they can access our domestic market directly, just like existing local players,” Faisol told reporters.

According to him, about 55 percent of Indonesia’s steel demand is still met through imports, mostly from China, as local production capacity utilization remains at 52.7 percent. The country imports an estimated 11 million tons of steel each year.

Faisol said the government views investment as a long-term solution to strengthen the national steel ecosystem, enhance supply security, and reduce trade imbalances. “If investors produce locally, we can meet domestic demand better and create more value in the process,” he said.

He also addressed the global slump in steel demand, driven mainly by the downturn in property and construction activities. “Basically, the decline in steel demand is happening everywhere,” Faisol said. “The property sector, which has been one of the main off-takers for steel, has slowed down significantly across the world.”

The slowdown has forced major steel-producing countries to search for new export markets, with Indonesia’s large domestic demand emerging as an attractive target.

Faisol added that most domestic steel producers remain focused on supplying construction and infrastructure projects, but the ministry is encouraging diversification into higher-value products such as alloy and special steel.

To support the sector, the government continues to enforce Indonesian National Standards (SNI) and implement investment-friendly regulations to build a more integrated industrial supply chain.

“The goal is not just to increase capacity, but also to bring in technology transfer and open more employment opportunities in the local value chain,” Faisol said.

The parliamentary hearing, originally intended to evaluate efforts to protect the national steel industry, was later postponed after Trade Minister Budi Santoso failed to attend. Commission VI decided to reschedule the meeting for a later date.

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