Chen sees SPV duplicating role of special steel committee

28 December 2015

CSC Steel Holdings Bhd has come out in support of the Malaysian Iron and Steel Industry Federation (Misif), which said the proposal to set up a special purpose vehicle (SPV) solely to import hot-rolled coils (HRCs) and downstream products into Malaysia should be objected outright.

“We already have a Mesyuarat Mingguan Besi Keluli (MMBK, which is chaired by the Ministry of International Trade and Industry) to determine steel players’ duty exemption eligibility on importing their respective grades of HRCs. I don’t understand why we need another body like the SPV to govern the same matter,” CSC Steel managing director Steve Chen Chung-Te told The Edge Financial Daily in an interview in Melaka recently.

International Trade and Industry Minister Datuk Seri Mustapa Mohamed last Tuesday said his ministry had received a proposal from Megasteel Sdn Bhd to set up the SPV, adding that it was still reviewing the proposal and gathering feedback from all stakeholders.

Chen said he personally does not understand the rationale behind the formation of the SPV, as Megasteel already has representation in MMBK that meets weekly.

“The steel business is not as simple as the rice industry, where Padiberas Nasional Bhd is the sole party to source and distribute rice in the country,” he said, adding that the idea of allowing a single party to import steel is “basically not healthy” for the entire industry.

“Irrespective of whether it is implementable or not, the function of the SPV is already duplicating the role of MMBK. So, why should we give an authority that is already assumed by a governmental body, to a private entity?” Chen asked.

Moreover, he said he doubts that the SPV could fulfil Malaysian steel players’ demand as every company has its own sources of raw material, and every player requires custom-made steel sheets, especially for higher grade products.

“If the SPV is formed to buy from the same sources, just let us buy directly [from them]. Why is it necessary to go through a separate company?” said Chen.

“Therefore, as a member of Misif, CSC Steel stands by the position of the federation which views the SPV proposal as unnecessary for the current Malaysian steel industry,” he added.