Steel companies ask for more tax incentives

Posted on 25 October 2017
 

Source: The Star Online

Local steel players, whose businesses are gradually picking up after a five-year slump, are vying for more tax incentives under Budget 2018 to ensure the survival of the RM41bil industry.

Malaysia Iron and Steel Industry Federation (Misif) president Datuk Soh Thian Lai said the Government should consider a five-year corporate tax relief for steel businesses undergoing consolidation exercises such as mergers and acquisitions (M&As) and joint ventures (JVs).

Misif, the umbrella body for the local steel sector, has over 130 members mostly in the midstream and downstream levels with several upstream steel players, which, in turn, represent almost the entire steel value chain.

Soh told StarBiz that Misif “was encouraging consolidation among the iron and steel industry players” to gain greater economies of scale.

In addition, it will create entities that would be more efficient, environment friendly, energy efficient and are able to withstand competition at home and gain better access to the global market.

For example, local steel manufacturers interested to have JVs with Chinese steel players could synergise their operations and venture into other areas of infrastructure and industrial development.

He added that such tie-ups could facilitate new technological and product development, export market expansion opportunities and human capital development for the industry to move forward.

“This is a positive development whereby our local players can refocus their business model and strategy,” Soh said.

For foreign investors, he said they could also venture into high-value-added products which do not compete with similar products or capacity available in Malaysia.

“Such an undertaking will bring a positive change in the local steel industry landscape and create new and downstream activities in various sectors,” said Soh.

Back in 2013-2015, local steel players raked up losses of up to RM2bil due to the global slump in steel prices and the influx of below-cost imported steel products, mainly from China.

Under Budget 2018, Soh said Misif also hoped that the One Belt, One Road (Obor)-related projects to be implemented in Malaysia would make it conditional for the developers to purchase 30% local steel products or any construction and infrastructure-related products.

Obor-related projects in Malaysia would likely focus on port infrastructure construction, land-water transportation channels, port-to-port cooperation and increasing capacity in information technology in maritime logistics.



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