Malaysia to lift cement ceiling price

Right about 1 month after Malaysia liberalize the steel market, the government is going to lift the ceiling price on cement effective Thursday 5 June 2008 to ensure development projects in the country are not delayed due to the tight cement supply. Prime Minister Datuk Seri Abdullah Ahmad Badawi said in a statement that this move was necessary as global cement prices had risen above the government-controlled price.

This move to lift the ceiling price has been long awaited by Lafarge (3794), CIMA (2844), YTL Cement (8737) and Tasek (4448). Artificially low prices had discouraged these producers from supplying more of the material, and had hampered the development of national and domestic projects.

Under the new structure, cement importers will on the other hand:

• pay a flat rate of 10% import duty for ordinary Portland cement (previously 50%)
• pay a flat rate of 10% import duty for ordinary hydraulic cement (previously 25%)
• exempted from having to obtain import licences (applicable to East Malaysia only)

Cement prices have increased 30% to 40% in past 3-4 years. The lowering of import tax on cement will overall be good in long term for the local construction and property industry and help to sustain cement supply in the country.