Malaysia: cement move draws mixed response

Malaysia: cement move draws mixed response
Published: 09 June 2008

The government’s move to abolish the ceiling price for cement with effect from June 5 has drawn a mixed bag of responses from industry players. Real Estate and Housing Developers’ Association (Rehda) president Ng Seing Liong said he welcomed the decision to liberalise the cement industry, but the concurrent move to impose a 10 per cent import duty on cement has raised concerns of price increase.

"The import duty is counter-productive in addressing the present cement shortage developers are facing and will result in local manufacturers raising prices."

With the abolition of ceiling prices, the government has also introduced a new condition for cement imports by imposing a flat 10 per cent duty, though importers in Sabah and Sarawak are exempted. The move, which comes hot on the heels of the removal of the ceiling price for steel last month, is to create transparent pricing for building materials particularly in view of escalating prices worldwide.

Master Builders Association of Malaysia (MBAM) president Patrick Wong concurred with Ng, saying "the import duty will cause hardship to the building industry as manufacturers raise their prices".

One way to ensure adequate cement supply for the domestic market, Ng suggested, is for the government to impose an export duty of 15 to 20 per cent to deter manufacturers from exporting to neighbouring countries.

Despite these concerns, developers generally indicated that the move is positive going forward.

"Scrapping the ceiling price would ensure a fairer and more competitive environment for cement producers," Bukit Kiara Properties Sdn Bhd group managing director NK Tong said, adding that "it would ultimately be beneficial to buyers".

Bukit Hitam Development Sdn Bhd general manager Lim Jee Kong said the issues the industry faces "won’t be immediately resolved as that may take a while, but it’ll be best for the industry in the long-term".