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Tuesday, June 3, 2008

Ceiling prices of cement to be lifted on Thursday

KUALA LUMPUR: The government yesterday announced the liberalisation of cement pricing, with the abolition of ceiling prices for the local market effective Thursday, with the hope that it would boost the cement industry in the country.

It also set new conditions for the import of cement, imposing a 10% import duty and exempting cement importers from Sabah and Sarawak from applying for import licences, Prime Minister Datuk Seri Abdullah Ahmad Badawi said in a statement.

Normal Portland cement (HS2523 29 900) and hydraulic cement (HS2523 90 0000) will be affected by this ruling.

Abdullah was quoted by Bernama as saying that this was in line with the government’s efforts to ensure that the country’s development would progress smoothly and to have a more efficient and transparent cement industry.

In an immediate response, Master Builders Association of Malaysia (MBAM) president Patrick Wong told The Edge Financial Daily that this was bad news for its members, as it would result in local cement manufacturers raising cement prices. The 10% import duty would cause hardship to the building industry and would prompt builders to seek alternative sources of cheaper cement.

Some economists, however, welcomed the news. “Construction players can have access to cheaper sources of the building material worldwide. They can pass down the lower cost to consumers through lower prices of homes and buildings,” Bank Islam Malaysia Bhd senior economist Azrul Azwar told The Edge Financial Daily.

Share prices of cement manufacturers in Malaysia fell yesterday following the announcement. Cement Industries of Malaysia Bhd dropped the most, by 3.3% or 20 sen to end at RM5.80, followed by Lafarge Malayan Cement Bhd, which shed 1.4% or six sen to RM4.34. YTL Cement Bhd dipped 0.8% or four sen to RM4.70.

By The EDGE Malaysia (by Tony C.H.Goh)

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