Miti to look at steel industry’s request for M&A incentives on case-by-case basis

PETALING JAYA: The International Trade and Industry Ministry (Miti) will consider and evaluate the steel industry’s request for merger & acquisition (M&A) incentives on a case-by-case basis. It will work with the Finance Ministry (MOF) to come up with a win-win solution for all parties.

Miti Deputy Minister Ong Kian Ming said that in M&As, the merged entity would seek certain tax incentives and exemptions, such as waiver of stamp duties on property transactions.

“This is part and parcel of what needs to be presented to MOF and since Miti is in charge of the overall steel policy, we want to present a comprehensive case in terms of why consolidation is good and why MOF should support these requests,” he told a press conference at the 2019 Trade Forum on the Malaysian Iron and Steel Industry here today.

Ann Joo Resources Bhd and Southern Steel Bhd have entered into a memorandum of understanding for the formation of 55:45 joint venture company in relation to their long product steel manufacturing businesses. This will be the largest M&A exercise by any steel company in Malaysia’s history. The merged entity plans to be listed on Bursa Malaysia.

“This would be an important benchmark for the rest of the industry as this would give an important signal for the possibility of other consolidation measures that could take place in the industry,” said Ong.

Ann Joo group managing director Datuk Lim Hong Thye said it is still working on its incentive request and will submit it to Miti as soon as possible.

Lim, who is also the Malaysian Iron and Steel Industry Federation president, said steel industry consolidation among players is the right path, allowing them to consolidate for stronger financial position, develop higher grade of steel products and enable consolidated entities to capture a wider reach globally.

“What we hope to achieve is to a create a regional long product leader. I don’t see the merger as (just an exercise) to turn around the losses.”

He said that in recent years, the sustainability of the industry has been at serious risk due to increasing international competition, rising costs of doing business and unfair trade practices.

“It is timely for the Malaysian steel industry to restore its competitiveness to compete against international entrants, whether in regional or domestic markets, supported by the right incentives.”

source https://www.thesundaily.my/business/miti-to-look-at-steel-industry-s-request-for-ma-incentives-on-case-by-case-basis-LX1527386