Since the announcement of the policy review of the iron and steel industry by the Ministry of International Trade & Industry (MITI) on 17 June 2009, the downstream manufacturing industries have expressed concern on the “protectionist” nature of the policy.
In this economic downturn of poor demand and weak prices, the global steel industry is facing a situation of excess capacity resulting in dumping by unscrupulous manufacturers on the one hand, and increasing protection in the form of tariff and non-tariff barriers by many steel producing nations on the other hand. Many countries have taken action including passing legislation requiring their industries to `buy local’. Against this scenario, the steps taken by the Malaysian Government under the policy review which encourages the use of local products is a positive development for the local steel industry.
The review augurs well for the local industry in providing a conducive environment for both upstream and downstream to work together to compete internationally and prevent foreign steel mills from dumping in Malaysia. It aims to encourage the use of locally produced goods as far as possible, while allowing the importation of those products not available locally as well as duty-free imports of products to be further processed for export. It also includes the introduction of mandatory standards for iron and steel imports so as to prevent sub-standard and poor quality products from entering the country that can harm the growth of the industry and compromise the safety of end-users.
However, in the implementation of the measures under the new policy, imports of steel products which can be deemed to be non-critical have been affected resulting in delay in getting the Certificate of Approval (COA) to import and clearance of cargo at the ports. MITI is understandably taking steps to resolve these issues by giving a two-months waiver to obtain the COA for imports, and together with SIRIM QAS, is identifying the list of non-critical steel products to be exempted from the COA. The testing of steel imports for the mandatory standards is also being expedited by SIRIM QAS with testing and issuance of the COA to be handled by more SIRIM offices throughout the country. We laud the quick response and action taken by the authorities to rectify the situation.
As responsible manufacturers, the local steel mills will always support the downstream industries to fulfill local demand and to export. Local production is especially important during times of shortage when downstream manufacturers are assured of supply. Likewise, the steel mills seek the support of the downstream industries to buy local whenever possible and especially during economic downturn to enable the upstream to continue operation. This is not a zero-sum game where winner takes all. Both the upstream and the downstream need each other to be viable in order for all to grow and contribute to the development of the industry and the local economy. We welcome all parties concerned to join hands and seek ways to work together for the benefit of the industry and the nation.