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Time to heed the pleas and plight of local steel players [18-07-2012]  
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SOME may wonder why the domestic steel sector, despite its strategic importance to the nation, has been left out of the Government's National Key Economic Areas (NKEAs) programme.

The sector has grown into a RM40bil industry in a short span of 30 years compared with other steel producing nations which took about 50 to 70 years to fully develop the sector.

For a fact, the higher apparent steel consumption and rising per capita steel consumption are indications that the country is heading towards an industrialised nation status.

Within Asean, Singapore is the highest in terms of per capita steel consumption at 515kg, followed by Malaysia (299kg) and Thailand (206kg) .

More importantly, as a country industrialises, its demand for steel shifts from long products (used in construction, infrastructural development and manufacturing) to flat steel products (commonly used in automobiles, white goods and other consumer durables).

In Malaysia, flat steel products producers are discontented for having to suffer losses from the heavy inflows of cheaper imported steel goods thus making the local goods uncompetitive.

Lately, there have been increasing calls for immediate protection actions by the Government to tackle the cheap imports issue.

The loudest call came from the Lion Group which said that it had garnered majority support from other local flat producers of hot-rolled coils (HRC), cold-rolled coils (CRC), steel plates, coated steel and pipes as well as end-users to back its proposal to the Government to curb excessive imports into Malaysia.

The proposal include the tighter enforcement on import regulations through duty exemption, duty drawbacks to prevent leakages and malpractices.

Many quarters are now questioning why the minimal enforcement or protection for the local flat steel products when other Asian governments are placing more anti-dumping and safeguard measures to protect their own steel industry.

India has 33 safeguard proceedings, followed by Indonesia (11) and the Philippines (nine).

Indonesia has filed 11 cases with five on the steel industry.

It has put anti-dumping on HRCs from Malaysia and six other countries, two safeguard measures on steel wire nails, 145% import duty on steel wire ropes.

Thailand had also imposed anti-dumping of HRCs from 16 countries including Malaysia.

China's move to give 13% rebate for export of CRCs and coated coils has led to cheaper imports into Asean including Malaysia.

Given the pressing situation, there is a proposal seeking the Malaysian government to increase export duty on scrap, one of the main raw materials for steel making, from the current 10% to 30% to retain local scrap for steel making whereas many other countries such as Indonesia, Vietnam and Thailand had banned or restricted their scrap exports.

To a certain extent, this is the most crucial period for the Government to immediately act on the pleas and plight of the local steel industry players.

To quote Lion Group's chairman and chief executive officer Tan Sri William Cheng recently:“Submissions for duty-free imports of flat products that are available locally threaten not just the sectors concerned but the entire local flat steel industry and violate the National Steel Policy.”

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