Malaya’s International Trade and Industry Ministry (Miti) is currently working closely with the relevant government agencies and steel industry players to finalise on the roadmap for the future competitiveness of the strategic RM40bn (US$13M) local steel industry, says Boston Consulting Group BCG.

BCG was commissioned by Miti in the first quarter of this year to undertake a nine-week comprehensive study on the competitiveness of the local sector and make recommendations to the ministry to develop an up-to-date plan for the future.

The local steel sector currently contributed about 4% to the country’s GDP and employed a workforce of about 150000.

According to the report, the steel industry is vital given the cascading impact it has on the economic development in many sectors such as oil and gas, electrical and electronics, transport, shipbuilding, building and construction, fabrication, machinery and equipment as well as the national trade balance.

Should the Government’s investment for the Economic Transformation Programme go as planned for Malaysia to be a fully developed nation, BCG forecast that by 2020, the local steel sector would be able to contribute 6.5% to the GDP and employed 225000 people.

“We also believe that there is room for another one or two more world-class local steel players reaching minimum efficient scale production of three to four million tonnes annually,” Azah added.

BCG consulting group has put up three key initiatives for the Government to focus on:

− Providing advantage access to selected imports such as to exploit Malaysia’s iron ore potential;

− Enforce trade remedies and standards; and

− Enhance the overall industry capabilities via the formation of Malaysia Steel Council (MSC) that will act as mechanism to close the critical gaps within the industry, and Malaysia Steel Institute, an independent body with authority from the Government to enforce standards.

MITI has taken action upon BCG recommendations to set up a technical committee and five working groups (WG) to address on the issues and proposals for the roadmap on the steel sector.

The working groups are to consider the building of a large steel complex; also to access key inputs (including price mechanism), a third to look at Steel Industry Capabilities, a fourth on Standards and Imports and a fifth on Trade Remedies.

MISIF forecast that steel consumption in Malaysia will growth by 3% in 2012 and 2013 before improving slightly to 4% in 2014.

The key driver for consumption going forward would be continued investments from both the Government and private sector.