The Malaysian Iron and Steel Industry Federation (MISIF) has reiterated its opposition to the imposition of Sales and Service Tax (SST) on primary steelmaking raw materials, warning that the move could hurt the domestic iron and steel sector.
MISIF said that applying SST on essential inputs such as steel scrap, iron ore, coking coal and coke would directly increase production costs and weaken the competitiveness of locally produced steel. Many products are already subject to SST rates of 5-10 percent, and the grace period that previously exempted some inputs has now ended with the latest tax update.
Impact on competitiveness and trade
The federation emphasized that this tax burden on raw materials comes at a time when many finished steel products enter Malaysia duty-free under free trade agreements (FTAs). As a result, locally produced steel could face higher costs compared with imports, creating uneven competitive conditions within the market.
MISIF warns that such cost imbalances could have wide-ranging consequences across the steel value chain. Higher input costs could weaken employment, discourage investment in value-added manufacturing, and increase dependence on imported finished steel products - outcomes that conflict with national goals of strengthening domestic supply chains and reducing import reliance.
Opposition to proposed tax trade-offs
The federation also rejected suggestions that it would support exempting some raw materials, such as steel scrap, in exchange for a higher 10 percent SST on iron ore, coking coal and coke. MISIF said such an approach would merely shift cost pressures within the industry without addressing structural challenges.
MISIF stated it remains supportive of government efforts to strengthen fiscal sustainability, but called on policymakers to carefully calibrate SST-related measures so they align with national industrial, decarbonization and supply chain resilience objectives. The federation said it stands ready to engage with the authorities to ensure that tax policies support both fiscal goals and the long-term health of Malaysia’s steel ecosystem.
