Malaysia’s iron and steel industry has renewed its opposition to the application of Sales and Service Tax (SST) on primary steelmaking raw materials, warning that the measure could weaken the sector’s competitiveness.
The Malaysian Iron and Steel Industry Federation (MISIF) said that applying SST on key inputs such as steel scrap, iron ore, coking coal and coke would directly increase production costs for domestic steelmakers. Several products are already subject to SST rates of 5–10%, and the expiration of previous exemptions has further intensified cost pressures.
MISIF noted that the timing is particularly challenging, as many finished steel products enter Malaysia duty-free under free trade agreements, potentially leaving locally produced steel at a cost disadvantage compared with imports.
According to the federation, higher raw material costs could have negative downstream effects, including weaker employment, reduced investment in value-added manufacturing, and greater reliance on imported finished steel, contrary to national objectives of strengthening domestic supply chains.
MISIF also rejected proposals to exempt steel scrap in exchange for higher SST rates of up to 10% on iron ore, coking coal and coke, arguing that such trade-offs would merely shift cost pressures within the industry rather than address structural issues.
While reaffirming its support for the government’s fiscal sustainability goals, MISIF called for SST policies to be carefully calibrated to align with Malaysia’s industrial development, decarbonisation and supply chain resilience objectives, adding that it remains open to further engagement with policymakers.
VietnamSteel by Hoa Sen Group
