This article first appeared in The Edge Financial Daily on September 28, 2018

KUALA LUMPUR: Malaysian Iron and Steel Industry Federation (Misif) president Datuk Lim Hong Thye said Malaysian steelmakers need greater long-term clarity on government policy in order to plan their capacity building, especially as the production of higher-grade products for the car and oil and gas industries requires time and know-how.

“The technology involved is more complicated than construction of steel. We need time to learn how to produce the high-grade products,” he told the media on the sidelines of Misif’s conference on the outlook of local iron and steel industry.

“That’s why Misif has been talking to Miti (ministry of international trade and industry) [about] coming up with a holistic plan — how to ensure the basic needs of the industry, especially upstream players, [are] taken care of.

“We are not talking about full protection, but certain measures need to be put in place in case there is predatory pricing from foreign imports,” Lim explained.

That being said, the federation’s president stressed that foreign investments are welcome in Malaysia’s steel sector so long as they “bring in technology or products that are not available in Malaysia now to complement local players”.

According to Lim, steel prices in Malaysia are unlikely to fall any further due to cost-push effects.

“Due to domestic and international issues, prices in Malaysia are at very suppressed levels,” he said, noting that domestic prices are expected to trend in line with international prices once business sentiment improves.

On incentives to boost consolidation among Malaysian steel manufacturers, Ong said he acknowledged the calls by Misif and said Miti would study this proposal with its counterparts in the ministry of finance.

“The interests of the midstream and downstream players must also be taken into account,” he said, adding that the industry must reflect on the need for structural reforms and work with the relevant government agencies.