Posted on 28 Oct 2024
The Malaysian Iron and Steel Industry Federation (Misif) has flagged rising cost concerns in the industry as it grapples with a series of new policies and an influx of low-priced steel imports.
In a statement, Misif president Roshan M Abdullah said the industry is navigating a “transformative period” fraught with challenges that threaten its competitiveness and long-term viability.
While recently introduced measures in the Budget 2025 aim to achieve national economic and social objectives, they impose considerable financial pressures on local steel manufacturers, Roshan said.
“The introduction of the carbon tax (from 2026), alongside the upcoming minimum wage hike, the multi-tier levy system and mandatory EPF contributions for foreign workers are collectively driving up the cost of doing business,” he said.
The federation said these cost increases are squeezing margins for Malaysian steelmakers, who are already facing an influx of low-priced steel imports into the country.
“These low-cost imports, often produced at lower costs due to different regulatory and economic conditions, undercut local prices and threaten the viability of domestic producers,” Roshan added.
Misif called on the government to consider the industry’s sustainability by addressing these challenges.
“Misif is committed to working with the government to find balanced solutions that support both the nation’s ESG agenda and the long-term competitiveness of the Malaysian iron and steel industry,” it said.
The energy-intensive iron and steel industry, as well as the wider energy sector, will be the first to be hit with the carbon tax by 2026, as Malaysia reaffirms its commitment to emissions reduction.
However, this tax could be imposed on steel imports too, according to deputy investment, trade and industry minister Liew Chin Tong.
“Since Malaysian steel producers have to pay the tax, imports from other countries should also pay the tax to ensure fair competition," Liew said during an iron-and-steel industry conference on Thursday.
According to the deputy minister, Malaysia's steel industry needs both the carbon tax and carbon tariff to remain competitive, with the proceeds going to a green transition fund.
A carbon tax is crucial to ensure steel imports are taxed similarly and to provide a level playing field for local producers, Liew had reportedly said.
Source:The Edge
