The International Trade and Industry Ministry (Miti) is currently working closely with the relevant government agencies and steel industry players to finalise on the roadmap for the future competitiveness of the strategic RM40bil local steel industry, said Boston Consulting Group (BCG) partner and managing director Nor Azah Razali.
BCG is commissioned by Miti in the first quarter of this year to undertake a nine-week comprehensive study on the competitiveness of the local sector as well as make recommendations to the ministry to develop an up-to-date plan for the future.
In unveiling the progress of the completed BCG study and its recommendations, Azah said BCG had distinctly identify the industry as a strategic sector for Malaysia even though it was not included in the Government’s National Key Economic Areas (NKEAs) programme.
“The local steel sector currently contributed about 4% to the country’s GDP and employed about 150,000 workforce.
“Its sustained growth is vital given the cascading impact it has on the economic development in many sectors such as oil and gas, electrical and electronics, transport, shipbuilding, building and construction , fabrication, machinery and equipment as well as the national trade balance,” she said at the ongoing Malaysian Iron and Steel Industry Federation (Misif) 10th Conference on the Status and Outlook of the Malaysian Iron and Steel Industry yesterday.
Azah pointed out that should the Government’s investment for the Economic Transformation Programme goes well as planned for Malaysia to be a fully developed nation, BCG forecast that by 2020, the local steel sector would be able to contribute 6.5% to the GDP and employed 225,000 workforce.
On the flat steel sector, she said BCG was of view that established local steel players have the opportunity to become more competitive and seize the regional captive markets.
“We also believe that there is room for another one or two more world-class local steel players reaching minimum efficient scale
production of three to four million tonnes annually,” Azah added.
On the BCG recommendations to MITI, she said the consulting group has put up three key initiatives for the Government to focus on;
* Providing advantage access to selected imports such as exploit
Malaysia’s iron ore potential,
* Enforce trade remedies and standards i.e strengthen safety net and
improve importation processes and
* Enhance the overall industry capabilities via the formation of
Malaysia Steel Council (MSC) that will act as mechanism to close the
critical gaps within the industry, and Malaysia Steel Institute, an
independent body with authority from the Government to enforce
Azah noted that MITI has taken action upon BCG recommendations to set up MSC, a technical committee and five working groups (WG) to
address on the issues and proposals for the roadmap on the steel sector.
WG 1 is for Megasteel Solutioning, WG2 is Access Key Inputs (including price mechanism), WG 3 is Steel Industry Capabilities, WG 4 is
Standards and Importation Process and WG 5 is Trade Remedies.
According to Azah, MSC committee was expected to meet end of this week to discuss on several issues brought up by steel players.
Meanwhile, MISIF consultant Frank Mizuno said MISIF forecast based on ts baseline scenario that steel consumption growth for Malaysia to
increase by 3% in 2012 and 2013 before improving slightly to 4% in 2014.
“The average annual growth rate under this scenario is about 3.3% for 2012 to 2014,” he said adding that the apparent steel consumption
(ASC) was expected to register 8.5 million tonnes this year and hit
9.1 million tonnes in 2014.
Mizuno expects the key driver for consumption going forward would be continued investments from both the Government and private sector..