Malaysia will further liberalize its iron and steel industry with the introduction of new measures to enhance competitiveness of the local industry, as well as encourage the manufacture of more competitive products for international market, effective from August 1, the Ministry for International Trade and Industry said Wednesday in a statement.

 

"The policy measures for the iron and steel industry are formulated after a series of discussions held with the Malaysian Iron and Steel Industry Federation since early 2007," MITI added.

 

Among them, manufacturing licenses will be granted without restriction to meet the demand for domestic and export markets for long and flat products.

 

MITI will continue to issue free import licenses for flat products for monitoring and data collection purposes while export license is not required. Import control for products of hot-rolled coils, cold-rolled coils and electro-galvanized iron through fixing the ratio between locally sourced and imported products will also be abolished.

IMPORT DUTIES FOR LONG, FLAT PRODUCTS TO BE REDUCED GRADUALLY

Import duties will be revised downwards for both long and flat products, effective August 1.

 

For long products, import duties will be reduced to 10%. This will then be further reduced to 5% from January 1, 2010.

 

For flat products, the duties will also be reduced to 25% and subsequently to between 0 to 10% from January 1, 2018.

 

In addition, import duty exemption for flat products, including HRC, CRC and EGI, will be given to raw materials used for the production of finished goods for the export market, irrespective of local availability.

 

Products for which grades and specifications are not produced locally for the local market and products used as raw material to produce nil duty finished goods will also be granted import duty exemption.

 

Steel service centers will also receive import duty exemption for products for which grades and specifications are not produced locally.

 

TO IMPLEMENT MANDATORY STANDARDS TO PREVENT INFLUX OF SUB-STANDARD GOODS

The government has agreed to implement mandatory standards for imported and locally produced long and flat products to prevent the influx of sub-standard products into the country.

 

These standards will be implemented in stages and will be effective from August 1 for iron and steel products which have Malaysian Standards.

 

Enforcement of mandatory standards will be implemented by the Construction Industry and Development Board, Department of Safety and Health and SIRIM QAS International.

TO ABOLISH FIXED HRC BASE PRICE, LET MARKET FORCES DECIDE

The current practice of the determination of hot-rolled coil base price by MITI will be abolished in order to allow the price to be determined based on domestic and international market forces.

 

Currently, this base price is determined on a quarterly basis, a MITI official said. "We compare Megasteel and international prices. And with a formula, we come out with the quarterly price which will be used by domestic mills to price their products," the official explained. She declined to comment further on the formula.

 

The domestic Q2 HRC base price is not available yet but the Q1 level is Malaysian Ringgit 3,102($883)/mt.

 

Megasteel, a member of The Lion Group, is the first integrated steel mill in Malaysia to produce flat steel products with a capacity of 3.2 million mt/year of hot rolled coil and 1.45 million mt/year of cold rolled coil.

 

Meanwhile, Malaysia has also introduced several measures to assist domestic producers meet the challenges brought about by developments in the global iron and steel industry. These measures were an increase in import duty up to a maximum of 50% and imposition of import license on flat products, such as HRC, CRC and EGI, and which came into effect on March 15, 2002. For long products, they have been long protected through the imposition of import duty between 10-30% and import license requirement. –Platts