Malaysia plans deeper local sourcing requirements for carmakers
Deputy minister Sim Tze Tzin says the planned excise-duty mechanism could create opportunities for domestic producers of automotive-grade steel.
Malaysia plans to make lower excise duties for carmakers conditional on greater use of local supplies, potentially opening another market for domestic steel producers, Deputy Investment, Trade and Industry Minister Sim Tze Tzin said.
Speaking in Subang Jaya at a Malaysian Iron and Steel Industry Federation conference, Sim said the new incentive mechanism (NCM) would apply to all carmakers, including Japanese, Korean and Chinese brands. Details would be announced soon.
Manufacturers would have to source more materials domestically, including substituting Malaysian steel for imports, he said. However, steelmakers would need to invest in automotive-grade production to serve that demand.
Sim said price competition and the investment needed to satisfy stricter safety requirements had so far limited efforts to replace imported steel in cars manufactured locally.
He also identified data centres and aerospace as potential markets beyond construction and infrastructure. Data centres could provide demand for server racks, cables and wire harnesses, while Malaysia's aircraft maintenance, repair and overhaul sector needed components that could offer higher margins despite smaller volumes, he said.
Sim said several large industry players had received support through pioneer status and investment tax allowances. The government could provide additional incentives for steelmakers investing in more complex production, with the aim of encouraging innovation and products suited to high-technology industries.
