News Update

Chua (centre) with the president of the association Datuk Soh Thian Lai (left) and deputy president Azlan Abdullah

PETALING JAYA: The steel industry is still important to Malaysia and will continue to be so in the future, said Deputy International Trade and Industry Minister Datuk Chua Tee Yong.

“There is this misperception that the steel industry is no longer important to Malaysia.

“There is also an export element that is being contributed by the industry, which is around RM28bil, and looking at how much they produce, they still do play an important role in terms of supplying the necessary raw materials to the domestic market,” Chua said at a press conference at the trade forum on the Malaysian iron and steel industry.

“In terms of investment, the Government has always been actively looking at how the industry can move up the value chain in the steel industry or to look into sustaining this industry.

Chua said that the steel industry also attracts attention from foreign investors from time to time.

“If you look at foreign direct investments (FDIs), from 2010 to 2016 for basic metal products there has been a total of RM32bil of FDI’s.

“This shows that the steel industry also does attract foreign investors: some are through joint ventures or through the establishment of new plants,” he said.

He said there needs to be more JVs or collaboration between local and foreign players to ensure the industry survives and remains competitive in Malaysia.

“This is especially so for steel industries as they need to operate through economies of scale,” he said.

On whether the Government would help support the steel industry, Chua said: “What would be approved in terms of government incentives would be dependent on the ministry of finance. MITI would always propose especially industries that promote job employment, multiplier effect, the reduction of imports: these are the few criterias that we look at when we promote a certain industry or even job creation like small and medium enterprises.”

Meanwhile, the Malaysian Iron & Steel Industry Federation president Datuk Soh Thian Lai said Malaysian steelmakers have no choice but to move up the value chain.

“This is not a choice of whether you want or don’t want to but you have to because you have to understand the surrounding competition.

“In Asean countries, we are growing using high technologies not low technologies.

“Even in China, their processes are high technology as well with automation. That’s why in Malaysia we encourage consolidation so that we are able to venture into high value added and high tech products,” Soh said.

On the outlook for the steel industry moving forward, Soh said the scenario in Malaysia is “improving substantially” compared to 2014 to 2016.

“There is still some uncertainty though and this largely depends on China.

“But the price ecosystem in Malaysia has largely stabilised due also to government intervention and the cutback in production in China.

“Moving forward, I can say that the outlook for the steel industry is bright for now. There is some light at the end of the tunnel,” Soh said.

“In general based on consumption and steel price, steel companies’ performance should be improving but some companies may want to do restructuring or reorganisation, it is possible that this type of companies may report some losses,” he added.