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Saturday, June 7, 2008

Steel millers to ask for windfall tax exemption

STEEL millers plan to ask the government not to impose a windfall tax on them despite their good profits of late.

The government slapped the tax on power producers and oil palm planters recently, and steel millers fear that they may be next.

The Malaysian Iron & Steel Industry Federation (Misif) plans to make its appeal next week.

"Our association will submit a memorandum to the Domestic Trade and Consumer Affairs Minister Datuk Shahrir (Samad) next week," Malaysia Steel Works (KL) Bhd (Masteel) managing director Tai Hean Leng said.

A windfall tax is usually imposed on industries that make supernormal returns and are insulated from inflation.

Shahrir had said that steel millers might face a windfall tax if steel bars sold in the country continued to be more expensive than in neighbouring countries, such as Singapore.

Master Builders Association of Malaysia (MBAM), which represents some 600,000 contractors, said that despite the liberalisation of the steel bar and billet market from May 12, steel bars sold in the country remained more expensive than in Singapore.

MBAM president Patrick Wong said steel bars in Malaysia sell for around RM4,000 a tonne, but are priced at RM3,679 a tonne in Singapore.

Tai, however, said the steel millers have not been spared from inflation.

"Malaysia does not have iron ore deposits of any viable commercial quality. We have to import the steel scraps and iron ore, and we have to manage the rising costs of these raw materials," said Tai, who is also a Misif council member.

Steel millers also have to contend with rising costs of electricity, coal and natural gas, he added.

By New Straits Times (by Ooi Tee Ching)

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