Metal dealers see adverse impact in new steel policy

From the Business Times:

SMALL- and medium-sized steel fabricators in the oil and gas sector will pay more for raw materials and may face irregular supply if the government goes ahead with a new policy for the steel sector next month.

"The new policy, which takes place on August 1 2009, is not really liberal as it seeks to re-introduce import tax on seven sectors which are currently tax-exempted," said Metal Dealers Association (MDA) of Kuala Lumpur and Selangor president Lim Sin Seong.

The sectors are steel products for use in automotive, electrical and electronics, shipping, oil and gas, furniture, exporters and licensed manufacturing warehouse/free zone companies.

"Customs officers insist that we pay 50 per cent import duties when the cargoes, under Asean Free Trade Area, are eligible for the CEPT (common effective preferential tariff) 5 per cent tax. We don't know if this is part of the new policy but lack of communication is causing us to lose a lot of money," he said.

I wonder if this is part of the steel liberalization plan. The 50% import duties are a bit rough if they were to do away with the current 5% that metal fabricators currently use. Even to reduce it to 25% in august for the new policy would be a steep price hike compared to the previous 5%. I doubt people won't complain if their company's costs for materials goes up 20% in one year!