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Wednesday, June 4, 2008

Steel millers may face windfall tax

STEEL millers may face a windfall tax if steel bars sold in Malaysia continues to be more expensive than in neighbouring countries.

"Our neighbour Singapore does not produce its own steel bars and yet it can source this commodity at cheaper prices. We will take Singapore as a benchmark for international pricing for steel bars," Domestic Trade and Consumers Affairs Minister Datuk Shahrir Abdul Samad said.

Two weeks ago, he had proposed for a windfall tax on industries that make supernormal returns and are insulated from inflation.

The government can carry this out using The Windfall Profit Levy Act 1998, which is usually carried out annually by the Inland Revenue Board.

Despite the liberalisation of the steel bar and billet market on May 12, prices are still higher at around RM4,000 a tonne. In contrast, steel bars go for around RM3,679 per tonne in Singapore.

To a request by Master Builders Association of Malaysia (MBAM) to waive the need to apply for storage permit for steel bar imports, Shahrir replied: "Since the lifting of price controls on steel bars and cement, I acknowledged there were imperfections and we may have overlooked on certain procedures. I will get my officers to remedy this situation starting today."

Following the government's move to liberalise the steel bar and billet market from May 12, MBAM president Patrick Wong said steel millers continue to benefit at the expense of the construction industry.

"Only two types of steel bars classified under HS Code 7214 were liberalised.

"How about all seven steel bar variants under HS Code 7214 and all four wire rods under HS Code 7213?" Wong asked.

By New Straits Times (by Ooi Tee Ching)

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