The investment management firm said the region’s growing share of global FDI suggests that member countries are benefiting from the semiconductor supply chain shifts.

“A structural recalibrating of global supply chains away from China and towards other markets is taking place. The beneficiaries of this move are spread across Latin America, Europe, the Middle East and Africa (EMEA), Asean and India.

“These countries possess cheap labour, have decent manufacturing bases and are producers of important commodities,” Eastspring Investments said in its market outlook for 2024 released today.

The report noted that a fast-growing population and rising middle-income consumers add to the Asean’s appeal.

In a recent statement, Investment, Trade and Industry Minister Datuk Seri Tengku Zafrul Abdul Aziz said Malaysia accounts for seven per cent of global semiconductor trade and 13 per cent of global chip testing and packaging.

Eastspring Investments also expects major emerging market economies should continue to see growth in the new year.

Globally, growth is likely to slow going into 2024 with the risk of a recession being higher over the next six to 12 months, as the lagged cumulative effects of policy tightening have started to kick in.

“Any recession is likely to be concentrated in the developed markets,” it noted.

Source: Bernama

Malaysia primed to attract more FDI in semiconductor industry — Eastspring Investments

The carbon capture, utilisation and storage (CCUS) industry has the potential to become a new source of national economic growth as well as generate high-value foreign investment, said Economy Minister Rafizi Ramli.

In order to stimulate the CCUS industry on the matter, Rafizi said he will speed up the preparation of a CCUS-related bill to be tabled in Parliament within a period of between 12 and 15 months from now.

“Because it is a new industry, there is a need for a framework in terms of laws, regulations, standards that need to be developed immediately,“ he said at a press conference after officiating at the First CCUS Conference 2023 organised by the Economy Ministry here today.

Rafizi said the preparation of the bill needs to be accelerated as a basis for Malaysia to become an industry leader and CCUS hub in the Asian region considering that the country has a substantive carbon storage capacity, strategic location, good communication network and a conducive business ecosystem.

While waiting for the bill to be fully completed, Rafizi said the Economy Ministry will work with industry players so that the community’s understanding, knowledge and development of the CCUS industry can be improved.

“For an industry of this size, of course the risk is big, the investment is big, the question of understanding, acceptance, monitoring by the people is also quite big,“ he said.

In terms of projected income from the CCUS industry, Rafizi said the industry is expected to contribute between US$200 billion and US$250 billion within 30 years.

The CCUS industry is also capable of creating about 200,000 new job opportunities as well as developing small and medium enterprises (SMEs) in related fields, he said.

In July, the government launched the National Energy Transition Plan (NETR) which set a target to develop three CCUS hubs by 2030, with a carbon storage capacity of up to 15 million tonnes per year.

The NETR is a plan developed to recognise CCUS as one of the focus areas and catalysts of energy transition initiatives capable of opening up economic opportunities and reducing the carbon footprint sustainably.

Rafizi: CCUS industry can become a new source of economy, generate high-value foreign investment

The lack of skilled electric vehicle (EV) workers nationally must be addressed if Malaysia is to keep up with the rapidly expanding regional EV market, says Tengku Datuk Seri Zafrul Abdul Aziz.

The Investment, Trade and Industry Minister pointed out that there was promising adoption of EVs globally over the last few years.

“A few years ago, it was rare to spot an electric car in Kuala Lumpur but these days they are not only frequently seen but charging stations are now found in many popular areas like shopping malls and even private residences.

“The Asean EV market, which was only valued at nearly US$500mil in 2021, is now projected to reach US$2.7bil by 2027,” he said during the launch of E-Mobility Asia (Ema) 2023 trade show here yesterday.

Tengku Zafrul said more progressive steps must be taken to reskill and upskill local industry players to keep up with the expected spike in demand for charging stations.

“EV owners must be able to charge any form of EV quickly, easily and reliably in an urban or rural setting in order to ease consumer concerns over range anxiety which will in turn also drive up EV adoption,” he added.

He said those who were able to meet the minimum standards set by government agencies, such as the Malaysia Automotive, Robotics and IoT Institute or MARii, should be allowed to join the industry.

“We need to look at not only training new people to join the industry but also the reskill and upskill of our existing EV workforce to address this shortage.

“Failing to do so might cause many issues for the local industry once the transition is in full swing,” he added.

Tengku Zafrul’s response came after Human Resource Minister V. Sivakumar revealed in a Parliamentary written reply dated Oct 13 that only one person in the country was currently qualified to install and maintain EV charging stations across the country.

Last month, Putrajaya said it aimed to install 10,000 EV stations by 2025. However, there are currently just 1,246 charging stations across the country.

Held at the Kuala Lumpur Convention Centre, the first Ema 2023 featured a trade exhibition and two conferences that would be held by key strategic partners in the green transport industry throughout its three day period from yesterday to Nov 24.

The newest mobility industry trade show, organised by Derrisen Sdn Bhd, was held together with the inaugural Sustainability Environment Asia trade show which together, featured 100 Malaysian and foreign exhibitors who are expected to welcome an estimated 12,000 attendees.

Source: The Star

Zafrul: Address lack of skilled EV workers quickly

Minister of Communications and Digital Fahmi Fadzil has reiterated that Malaysia continues to be a preferred investment destination, particularly for investments in data centres. 

He said there has been growing interest in what Malaysia could play with regard to hosting data centres, and the government is committed to developing governance structures, public policy and regulatory frameworks.

“We are prepared to engage with businesses, organisations, in order to have a particularly robust and future-ready ecosystem, what more given that Malaysia will chair Asean in 2025. At this stage, different countries within Asean possess slightly different preparedness when it comes to regulatory framework, particularly around data protection. 

“As such, we will not only be working on economic framework agreement but also working with my counterparts to accelerate the development of regulatory frameworks within Asean, to make sure that 660 million people are more ready to embrace and participate in digital economy,” he said at the Digital Transformation Leaders CxO Summit — Intelligent Digital Transformation in the 5G Era, here on Wednesday. 

In the Malaysian context, Fahmi said one of the matters that need attention is convincing not only the Malaysian public, but also businesses, on opportunities of how technologies, including 5G, could help to not only reduce cost, increase efficiency and productivity, but fundamentally shift and bring some changes to organisations to prepare for future technologies. 

“So, I encourage you (leaders at the summit) to start having more conversations, including with Malaysia Digital Economy Corporation (MDEC), to see what the federal government can do to facilitate and expedite your investments, including bringing talents from abroad,” said Fahmi. 

He said this is a commitment given by the Prime Minister Datuk Seri Anwar Ibrahim, in that he (Anwar) wishes to change the way the world looks at Malaysia. 

Fahmi said it is also in line with the country’s New Industrial Master Plan 2030, whereby one of the key pillars to drive economic growth for the next decade is the digital economy. 

Meanwhile, MDEC chief executive officer Mahadhir Aziz said it would be exploring many parts of technology adoption and areas, not only 5G, but a combination of blockchain and artificial intelligence (AI), among others.

He said that MDEC is actively strengthening the technological ecosystem, offering crucial support and resources to cultivate innovation, foster growth, and drive digital transformation. 

“Through fostering a dynamic collaborative environment, MDEC is committed to propelling Malaysia toward a future characterised by cutting-edge advancements and sustainable digital development,” he said.

Source: Bernama

Fahmi: Malaysia remains preferred investment destination for data centres

The government is determined to capture a “good slice” of the Asean electric vehicle (EV) market, which is estimated to reach US$2.7 billion by 2027 from US$500 million in 2021, Investment, Trade and Industry Minister Datuk Seri Tengku Zafrul Abdul Aziz said.

He said Malaysia has a competitive edge to attract more high-value investments, having developed a comprehensive ecosystem for the EV and Next Generation Vehicles (NxGV) industries.

“In getting the fundamentals right on our NxGV ecosystem, we are diligently building the necessary infrastructure to achieve our target of having EVs and hybrids account for 20 per cent of new car sales by 2030; 50 per cent by 2040 and 80 per cent by 2050,” he said at the launch of E-Mobility Asia 2023.

Tengku Zafrul said the government has a strong policy push and over the past 50 years, Malaysia has developed a strong electrical and electronics (E&E) industry, mainly in semiconductors that have firmly entrenched itself in the global supply chain.

Semiconductors allow EVs to become smarter and safer, paving the way for a greener future.

He said Malaysia accounts for seven per cent of global semiconductor trade and 13 per cent of global chip testing and packaging.

Therefore, he said Miti and its agency the Malaysian Investment Development Authority (Mida) are strongly pushing for more semiconductor investments.

Between 2018 and June 2023, MIDA approved 59 projects worth RM26.2 billion in the EV and related ecosystems for vehicle assembly, manufacturing parts and charging components.

“Malaysia has become a highly attractive destination in the region for all EV investors because of these established existing ecosystem advantages that are highly conducive for the development of EVs and its related components.

“These are compelling factors for big names such as Tesla to announce its entry into the country, joining global automakers like Geely, Chery and BYD from China, Hyundai from South Korea, as well as Mercedes Benz and BMW from Europe, that are already in the Malaysian market,” he said.

He reckons Malaysia have still a long way to go to ensure a robust EV ecosystem, such as in developing a greener grid and related power distribution networks.

“Most importantly, the wide range of new mobility solutions can open up technology transfer and innovation for our SMEs, as well as higher-paying jobs for Malaysians,” he noted.

He said MITI is constantly reviewing policies to ensure Malaysia’s EV ecosystem is holistic and fully supported to attract high-level investments.

“We look forward to welcoming more multinational EV, NxGV and renewable energy (RE) investors to Malaysia to become our growth partners in developing a strong Malaysian EV supply chain to meet the needs of the regional and global market.

“Towards that end, we also hope to collaborate with our neighbours in Asean — whether they are from Thailand, Vietnam, Singapore, the Philippines or Indonesia — to complement each other’s strengths so we can capitalise on supply chains that have shifted directly on our (Asean) doorstep,” he noted.

He also added that the government will commence the operation of the Invest Malaysia Facilitation Centre (IMFC) next Monday, ahead of January. It was scheduled earlier to facilitate the business community and investors.

IMFC is a one-stop centre to speed up approval processes, including the provision of consultation and advisory services, and to reduce bureaucracy in public service delivery.

This initiative is an improvement to the existing advisory service centre at MIDA and is in line with Prime Minister Datuk Seri Anwar Ibrahim’s recommendations.

On Thailand’s US$28 billion landbridge plan for cargoes to bypass the Straits of Malacca, he said it’s too early to comment on its impact on Malaysia.

“We will wait for the details. But again, there are pros and cons, but we still need both land and sea (connection) at the end of the day,” he said in response to a question on the sort of challenges it will pose to Malaysian ports. 

Source: Bernama

Tengku Zafrul says govt eyes a ‘good slice’ of projected US$2.7b Asean EV market

The government is optimistic that local car manufacturers will be able to produce the first national electric vehicle (EV) by 2025, the Ministry of Investment, Trade and Industry (MITI) said.

Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said local car makers have embarked on research and development (R&D), including investing in producing the country’s first EV.

“At MITI, they have shared an update on their plan; our team from MITI was also quite involved in understanding the progress. Therefore, so far it looks achievable. If you hear national (car) companies’ briefings, we will be able to achieve the goal we are aiming for in 2025,” he told the media after launching the smart #1 EV today.

He added that Proton Holdings Bhd has also shown its commitment to investing in EV charging stations.

Hence, Tengku Zafrul said he is confident Malaysia will be able to achieve its target of providing 10,000 EV charging units nationwide by 2025.

On the affordability of EVs, Tengku Zafrul said the government has proposed that more EV makers locally assemble completely knocked-down (CKD) units to keep prices affordable.

“The government does give a lot of incentives for EVs, but as mentioned earlier, these incentives must be enjoyed by all Malaysians, not just those who can afford them. We want to democratise the use of EVs. We want to make sure more people can afford them.

“On EV road tax, we have discussed it at the National EV Steering Committee (NEVSC). Transport Minister Anthony Loke is finalising it now and I believe he will make an announcement soon,” he said.

In his speech, Tengku Zafrul said the entry of a world class automaker such as Smart into the Malaysian market underscores the country’s relevance in the regional automotive landscape, particularly in the EV segment. He said Smart’s vast global experience and access to leading technologies would have a spillover effect on the local industry in generating new ideas and spurring high-tech research and development (R&D).

“More importantly, the potential for job creation will be immense where new skillsets are required to meet the demands of this emerging sector.

“This will not only attract talent but promote entrepreneurship in the EV space,” he said, adding that the new collaboration will also support the Automotive High-Tech Valley (AHTV) in Tanjung Malim, Perak, in its vision to be a high technology automotive hub and the prime location for future car development by the Proton group.

Proton Holding’s wholly owned Proton New Technology Sdn Bhd (Pro-Net) is the exclusive distributor for smart #1 in Malaysia and Thailand.

Pro-Net chief executive officer Zhang Qiang said the company is committed to reshaping the landscape of premium all-electric mobility in the country.

“Our dedication lies in reshaping consumer confidence through exceptional aftersales service, which includes readily available parts, an integrated public charging map, and a seamless digital ecosystem. We firmly believe the key to success is to place customer needs and desires at the heart of every product and service we offer,” he said.

Zhang said Pro-Net is targeting to achieve a sales target of 800 to 1,000 units of smart #1 next year, after receiving 500 bookings even before announcing its official price. He said 80 per cent of the bookings were received digitally via the Hello smart application, of which 60 per cent were for the smart#1 Brabus model.

smart #1 comes in three variants, namely, Pro, Premium and Brabus priced at RM189,000, RM219,000 and RM249,000, respectively.

Zhang said Pro-Net aims to export the vehicle to Thailand by the middle of next year.

Source: Bernama

MITI optimistic local car makers can produce first national EV by 2025

KUB Malaysia Bhd, whose largest shareholder is Datuk Seri Johari Abdul Ghani, has proposed to acquire an 86.65% equity interest in Central Cables Bhd (CCB) from the businessman-politician’s investment vehicle JAG Capital Holdings Sdn Bhd.

The purchase consideration of RM119.42 million will be satisfied via the issuance of 199.04 million new shares in KUB at 60 sen per share, KUB said in a filing with Bursa Malaysia on Tuesday.

Upon completion of the acquisition, KUB said it will extend a mandatory general offer to acquire all of the remaining CCB shares at RM2.60 per share to be satisfied either wholly in cash amounting up to RM18.4 million in total or via the issuance of new shares in KUB, also at an issue price of 60 sen per share. This brings the total valuation of CCB by KUB to RM137.82 million.

CCB was incorporated in 1967 and is principally involved in the manufacturing of power cables and wires.

Johari’s son, Amir Nashrin Johari, is a director in both CCB and JAG Capital.

KUB said the acquisition will enable the group to venture into the manufacturing of power cables and wires, which is an upstream activity within the value chain of the power industry that will integrate well with its existing power business under wholly owned subsidiary KUB Power Sdn Bhd.

KUB Power provides civil engineering services within the power industry, including substation and transmission line construction, supply and installation of electrical infrastructure, and electrical maintenance.

KUB also seeks to capitalise on the resources, expertise and strength of CCB in securing new projects for the power business, thereby enhancing its operational efficiencies, bidding strategies, financial position and prospects of the enlarged KUB group.
 
KUB expects the new business under CCB to contribute 25% or more of the group’s net profit and/or result in a diversion of more than 25% of the net assets of the group going forward.

“This is consistent with the group’s plan to diversify its revenue and income stream so as to mitigate the risk of overdependence on the LPG (liquefied petroleum gas) business as well as to reap the synergistic benefits from the proposed acquisition,” the group added.

For the financial year ended June 30, 2023 (FY2023), CCB increased its profit after tax by more than five times to RM11.65 million compared with RM2.03 million in FY2022 as revenue increased 41.7% to RM199.15 million from RM140.55 million, mainly due to an increase in purchase orders received from customers. Its total borrowings stood at RM42.75 million with a gearing of 0.53.  

KUB’s 1Q net profit surges 96.3%

In a separate bourse filing, KUB announced on Tuesday that its net profit for the first quarter ended Sept 30, 2023 (1QFY2024) surged 96.3% to RM7.35 million from RM3.74 million a year ago, largely driven by the encouraging performance from the LPG division and a gain from disposal of assets of RM2.8 million.

However, quarterly revenue dipped 11.2% to RM114.04 million from RM128.41 million previously.

Looking ahead, the group said it continues to foresee a challenging and competitive economic environment to remain as issues in FY2024 due to weakening of the ringgit and inflationary pressures.

“Overall, the group will continue to maintain a cautious stance on the overall market and industry outlook, while remaining flexible in executing strategic plans in expanding our existing business and identifying new business opportunities as and when they arise,” KUB said.

Shares of KUB inched up 0.5 sen or 0.9% to close at 56 sen, valuing the group at RM308.84 million in market capitalisation. 

Source: The Edge Malaysia

KUB to venture into power cable manufacturing via acquisition of Central Cables

Local companies and communities are expected to benefit from the economic spin-offs of foreign direct investment (FDI) in the hydrogen industry, said Datuk Dr Hazland Abang Hipni.

The Deputy Energy and Environmental Sustainability Minister said there are currently two hydrogen projects being undertaken by Sarawak Economic Development Corporate (SEDC) at the Petchem Industrial Park in Bintulu.

“Local companies and communities will benefit from the jobs and business opportunities from the economic spin-off created to support the projects and expansion of the supply chain, both downstream and upstream activities,” Dr Hazland said today when responding to a question during the second day of State Legislative Assembly (DUN) sitting.

The projects include a partnership with a consortium of companies from South Korea with a proposed investment of RM11.3 billion, where the joint development agreement was signed on Oct 16.

Another partnership was established with Japanese investors with a proposed investment of RM8.5 billion, where the joint development agreement was signed on Oct 25.

Dr Hazland said a partnership was also formed with Petronas Technology Ventures Sdn Bhd with FDI worth RM30 million and domestic direct investment of RM100 million.

“Ministry of International Trade, Industry and Investment (Datuk Amar Awang Tengah Ali Hasan) is discussing with an Australian investor on its proposed hydrogen project worth RM5.6 billion (US$1.2 billion) in Samalaju Industrial Park,” he added.

Dr Hazland said four frameworks need to be prepared before the government undertakes any green investment or related projects, which covers the legal, technical, finance and taxation, and human resources frameworks.

Separately, he said the state government intends to intensify the installation of floating solar and offshore wind energy to further greenify the state energy grid, which will see investments from local and international partners.

Other investments include the Carbon, Capture, Utilisation and Storage (CCUS) initiative, biotechnology, and the microalgae cultivation project at Sejingkat power plant.

He pointed out the factors driving FDI in Sarawak are a stable government, business-friendly investment policies, efficient government machinery, availability of natural and renewable resources, young talent workforce, and availability of land for development purpose.

Source: Bernama

Spin-offs from FDI in hydrogen industry to benefit local companies, community

The expansion and development of the green furniture industry can make the industry “the next trillion dollar business”, said Deputy Prime Minister Datuk Seri Fadillah Yusof.

He said the use of green furniture that uses natural materials does not contain harmful substances and does not emit harmful gases, and can reduce environmental pollution.

“The use of furniture at present is a source of pollution to the environment if not managed well. I suggest that in developing green furniture, it must be viewed holistically because every furniture production ecosystem contributes to the production of carbon footprints,” he said at a symposium on green furniture here today.

Also present were the Minister of Natural Resources, Environment and Climate Change (NRECC) Nik Nazmi Nik Ahmad and the Director-General of the Forestry Research Institute of Malaysia (FRIM) Dr Ismail Parlan.

Therefore, he said FRIM’s efforts to recognise companies in Malaysia with the recognition of green furniture under FRIM’s Green Furniture Certification Scheme can bring a positive impact to companies involved in the green furniture industry.

This is because the effort is able to increase the credibility and competitiveness of the companies involved and further help them market green furniture products in the domestic and international markets, he said.

Meanwhile, he said the export of wooden furniture is the main contributor to the overall export of the country’s timber industry, recording an export value of RM11.1 billion out of the total export of the country’s timber industry which was RM25.2 billion last year.

The 2023 National Green Furniture Symposium themed ‘Sustaining the Industry Towards a Circular Economy’ organised by FRIM in collaboration with the Malaysian Timber Industry Board (MTIB) was attended by more than 200 participants consisting of government agency representatives, industry players and research officers in the industry.

Source: Bernama

DPM Fadillah: Green furniture industry can become ‘next trillion dollar business’

When Smith & Nephew plc made its maiden foray into Malaysia in 2020, ensuring that the new manufacturing plant and the operations met the company’s goals of minimising its ecological footprint was non-negotiable.

“As a manufacturer of medical devices, we make people’s lives better, so if the way we make and distribute these things is causing more harm than good, it doesn’t look good on the overall image of the corporation. For us, sustainability means doing right by our people, planet and ensuring the products are as sustainable as can be,” says Smith & Nephew Malaysia managing director and site leader Mark Arthun.

Its 250,000 sq ft high technology manufacturing facility located in Batu Kawan Industrial Park, Penang, was completed in June 2021 and built with sustainability in mind.

The facility uses sustainable materials such as energy-efficient lighting and appliances, water-saving fixtures such as rainwater harvesting systems, charging facilities for electric vehicles and a roof that can accommodate solar panels.

It is guided by the US Green Building Council’s Leadership in Energy and Environ­mental Design (LEED) and attained the LEED Silver certification this year, becoming the third manufacturing plant in Penang to receive this acknowledgement.

The Penang facility has also achieved the goal of zero waste-to-landfill, the first in the Smith & Nephew group to do so globally. Through waste management initiatives, the waste generated from its operations — metals, plastics, paper and wood — is diverted away from the landfill. This goal was achieved four years ahead of its corporate sustainability target.

Finding champions in the company

The company kicked off its sustainability initiatives with the establishment of an environment, social and governance (ESG) committee comprising employees from various functions who have one thing in common: a passion for sustainability.

Senior manager for health, safety and environment (HSE) Ng Chee Wei is one of the members, with Aurthur serving as the sponsor, who ensures the team gets the budget they require and executes the initiatives.

One of the committee’s key tasks was to understand and identify the waste streams of the facility, which produces orthopaedic products.

“To understand our waste streams, we researched the ways these wastes can be recycled or recovered. We worked with partners externally and internally to determine the right suppliers to work with — those who have the capability to carry out the recycling and recovery for us. We’ve also registered them as our vendors and carried out audits to ensure that they have the capability and capacity to recycle the waste,” says Ng.

Practising Zero Waste

The facility is fortunate in that the main by-products of its manufacturing operations are expensive, high-quality materials that boast a high potential for a new lease on life.

For instance, metal shavings such as cobalt chrome are sold to a metal recycler for smelting and eventual reuse. As for other wastes such as coolant, plastic and paper, the company pays for these to be recycled. At the manufacturing facility itself, many recycling bins have been strategically placed to enable easier waste segregation and ease recovery.

As the facility ramps up production, the waste it generates is expected to rise. But the facility, says Arthun, will continue to maintain its zero waste-to-landfill stance.

The company established a chemical management protocol. Any new chemicals being considered for use must be first evaluated by the HSE department. This is to ensure that hazardous materials are not introduced, even in trace amounts, into the processing plant in Penang.

The company has also spent an estimated RM5.4 million on environmental pollution control systems, including an evaporator system equipped with activated carbon to treat industrial effluents. “All wastewater goes through performance monitoring to ensure that it is safe to be released,” says Ng.

The production plant has 10 units of milling machines that use an air purging system and dust collector, dispensing with the need for chemical coolants. “For air emissions, we have a scrubber connected to a chimney to filter out all the acid fumes from one of our processes. It is equipped with online monitoring to ensure that the emission is always below the standard permitted,” adds Ng.

In addition, the company has been able to meet 22% of its total electricity needs through the 1.4MW solar photovoltaic system that occupies 60% of its roof space.

Energising the people

The key to the company’s success in implementing sustainability initiatives is having a team of people who are truly passionate about safeguarding the environment.

“In our success, we found not just one but two people who are critically passionate about ESG: myself and Chee Wei. It was not by design that I was selected [for this role] because of my passion for ESG and it was not by design that Chee Wei was selected because of his passion for ESG,” says Arthun, describing the circumstance as a wonderful coincidence.

“We’ve set targets to differentiate ourselves from the corporate communities in Malaysia as well as other Smith & Nephew operations and our competitors, and through these top-down goals, we have achieved these successes.”

Arthun traces his sustainability ethos to his background and experience. “I grew up on a cattle ranch in Montana in the US. As a cattle rancher, you’re basically managing an ecosystem. You can’t overgraze; you need to ensure appropriate access to water; you need to ensure that the cattle aren’t ruining the water sources and polluting the water streams.”

All that is part of creating a natural ecosystem, he adds. “And just through this mini environment that I created with my family, I know how much influence humans can have on the environment. I learnt that if we’re not responsible stewards of the environment in which we live, we will all suffer greatly. There is no doubt that climate change is real and that we’ve been abusing our planet for many decades. We need to do our best as corporate citizens to manage our planet just as my family managed the ranch.”

As for Ng, his background in environmental technology provided exposure to climate change and global warming. “My university studies and documentaries like Al Gore’s An Inconvenient Truth shaped my thinking about the environment and sustainability, and I used to do beach clean-ups, for example, on my own. Now I have a big group and the resources and influence to do more,” he quips.

Arthun adds that employee engagement with the company’s sustainability initiatives has not been a hard sell. “The employee base today is no longer in denial of climate change or global warming and it’s now becoming more and more central to their employment. It is the same with me. I really aligned fundamentally in principle with the company and its values, and this is something that is increasingly evident in the workplace.”

Continue to be pioneers

In the medium term, Ng says the plan is to achieve a 70% reduction in its Scope 1 and 2 emissions by 2025, which refers to direct and indirect emissions; and hitting net zero by 2040 for these emissions and for all emissions by 2045, including those from its value chain.

According to Ng, the company is preparing for an assessment of its Scope 3 emissions, which it hopes to complete next year. To address Scope 2 emissions, the company is pursuing an ISO 50001 Energy Management System certification. The company’s purchase of renewable energy certificates also complements its Scope 2 carbon reduction journey.

Although the country’s power grid, which is still reliant on fossil fuels, has been a challenge for the company to meet its renewable energy goals, there have been some positives in the journey thus far. “The availability of vendors and the infrastructure to support zero waste-to-landfill has been a positive surprise,” says Arthun, pointing out that some of the company’s sister sites globally are finding it difficult to tap suppliers who can recycle waste. “But that’s not been the case here; there are definitely opportunities for the green economy in Malaysia.”

Source: The Edge Markets

Manufacturing: Starting from the top

STEEL players have welcomed the government’s decision to impose a two-year moratorium on all expansion and diversification of manufacturing activities in the iron and steel industry, saying the move will allow them to reconfigure their businesses.

The government is also considering exemptions from the moratorium on projects for the production of complex iron and steel products with high added value that support the missions and aspirations of the New Industrial Master Plan (NIMP) 2030.

Malaysia Steel Association (MSA) vice-president Datuk Seri Tai Hean Leng says the moratorium will allow the local steelmakers to have a “time out” to assess their businesses and capitalise on the direction that the government is taking, as outlined under various policies.

The Madani government has introduced a bunch of new road maps to reform and restructure the Malaysian economy, including through NIMP, the National Energy Transition Roadmap and the revised 12th Malaysia Plan (12MP).

“The moratorium will also allow Miti (Ministry of Investment, Trade and Industry) to ‘operationalise’ salient precepts from NIMP 2030 for its licensing of new steel capacities and financing support for decarbonisation pathways,” Tai tells The Edge.

To recap, on Nov 14, Deputy Minister of Investment, Trade and Industry Liew Chin Tong told the Dewan Rakyat that the government had implemented a two-year moratorium on the expansion and diversification of the country’s steel-making industry, effective Aug 15, 2023.

The moratorium covers all inquiries, assessments of current applications, new applications, licence transfers, expansions, regularisations and diversifications for manufacturing licences in the iron and steel industry. It also involves a freeze in the issuance of certificates for exemption from manufacturing licence (ICA10) under the Industrial Coordination Act 1975 (Act 156) for manufacturing activities, including non-ferrous recycling activities.

The deputy minister said applications for steel manufacturing licences that are aligned with the agenda of NIMP, however, can be considered for exemption from the moratorium. This includes complex iron and steel products equipped with low-carbon or carbon-reduction technologies.

The moratorium was introduced in the light of the significant excess capacity faced by the regional steel industry, Liew told the Dewan Rakyat. He said the total capacity for iron and steel products in Southeast Asia is expected to increase twofold to 150 million tonnes by 2026.

Publicly available data show that the apparent steel consumption (ASC) of the six largest economies in Southeast Asia was about 80 million tonnes a year. This shows that there is a severe overcapacity of iron and steel products in this region.

Looking at Malaysia particularly, over the five-year period from 2018 to 2022, the country’s ASC peaked at 9.78 million tonnes a year in 2018, declined 5.8% year on year to 9.21 million tonnes in 2019, before plunging 26% y-o-y to 6.81 million tonnes in 2020 due to the Covid-19 pandemic. The country’s ACS then increased 3.2% y-o-y to 7.03 million tonnes in 2021 and 6.9% y-o-y to 7.52 million tonnes in 2022, according to statistics produced by the Malaysian Iron and Steel Industry Federation (MISIF).

In a commentary published in The Edge on Nov 13, Liew stated that Malaysia’s steel production capacity in 2021 stood at 16.1 million tonnes per annum, being the third largest producer in Southeast Asia behind Vietnam and Indonesia. This shows there is overcapacity in steel manufacturing in the country.

At the same time, however, there is a gap in the supply of flat steel in Malaysia, according to Liew, as long products had dominated steel production in the country for an extended period of time. Long products are typically used in the construction sector, while flat products are more widely used in the manufacturing sector.

As the government is committed to transforming the manufacturing industry to reach greater heights, the country’s steel manufacturing industry needs to move up the value chain by producing steel products that are not locally available to reduce the dependence on imported steel and to ensure the availability of raw materials for the local industries that consume steel.

MISIF president Datuk Lim Hong Thye echoes this sentiment when contacted by The Edge. He says many steel products, especially those of higher grade and hot rolled coils (HRC), are not being produced in Malaysia.

“Malaysia is facing severe excess capacity in many areas like the production of rebar, wire rods for construction usage and cold rolled flat products. But Malaysia is also in a very peculiar situation where we don’t have a single tonnage of HRC production, the main flat steel product. So, we hope the government can use this moratorium to address this issue,” says Lim.

Miti’s deputy minister Liew said any new manufacturing licence applications for iron and steel production would be evaluated based on 12 parameters set out under NIMP. However, the details are still being ironed out.

On this, MISIF’s Lim proposes a strict enforcement of conditions to be imposed on manufacturing licences issued for those products that are already in a serious overcapacity situation. He also proposes that the government bring the banks together to work with existing steel mills that are willing to reinvest to move up the value chain by producing higher-grade steel that is currently being imported. “A reasonable time frame, conditions and incentives should be worked out,” he adds.

Meanwhile, MSA’s Tai says that to address the oversupply of long products, the association proposes that the government impose a carbon tax to streamline the supply of low greenhouse gas emissions long products in the local market. “Implement the Carbon Border Adjustment Mechanism (CBAM) to ensure the import of long products from high GHG emissions foreign steel mills are restrained,” he suggests.

He adds that the government should enact a Malaysian Green Steel Standard to ensure only mills that have demonstrated substantive efforts to comply with the ESG framework to decarbonise their processes and green their supply chain will be the preferred steel products for the local market.

It is not all doom and gloom for the local steel-making industry however. While many steel mills in the country are grappling with overcapacity and inefficient operations, Eastern Steel Sdn Bhd has been doing rather well. The company is a joint venture between Hiap Teck Venture Bhd (27.3% stake) and Shanxi Jianlong Industry Co Ltd.

Eastern Steel successfully ignited a two million tonne blast furnace at its Kemaman plant in August 2023, which increased the JV entity’s steel production to 2.7 million tonnes, as part of a RM3 billion investment that started in 2021.

“This expansion in capacity, together with the progressive completion of the plant’s auxiliary facilities, will lead to a multifold increase in the JV entity’s revenue with significant cost savings from the greater economies of scale,” states Hiap Teck in its 2023 annual report.

According to the company, Eastern Steel recorded revenue of RM2.24 billion for the financial year ended July 31, 2023, with a profit after tax of RM163.06 million. In FY2023, Hiap Teck’s share of profit from Eastern Steel amounted to RM44.52 million.

Looking ahead, Malaysia’s ASC is anticipated to grow by 4.1% to 7.8 million tonnes in 2023 and another 4.1% to 8.1 million tonnes in 2024. Although still below pre-pandemic levels, the ASC is expected to continue growing in tandem with the country’s development.

Open communication and collaboration between industry stakeholders and the government will be crucial to ensure the moratorium positively impacts the industry’s overall trajectory, says Calvin Ooi, executive director of Leon Fuat Bhd. “We are open to constructive dialogue with the relevant authorities to ensure the moratorium serves the best interests of the industry and supports initiatives that contribute to its long-term sustainability and growth.”

He adds that incentivising diversification in the steel industry through targeted financial incentives such as tax breaks and subsidies are key to encouraging steel millers and traders to broaden their product portfolios.

Ooi also proposes regular industry assessments to proactively identify potential oversupply situations, allowing for timely adjustments to policies and strategies based on dynamic market conditions. “This approach, tailored to the trading and processing nature of companies like ours, will contribute to a resilient and innovative steel industry,” he says.

Source: The Sun Daily

Steelmakers welcome government’s two-year moratorium on long products