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“In general, it is a positive move for retailers such as hardware shops and will benefit small contractors such as those in Class M. Bigger developers will not be affected by this measure as they tend to buy directly from steel and cement distributors,” he said.
The scrapping of the retail licences by July 15, 2010 was announced by Datuk Sri Ismail Sabri Yaacob, minister of Domestic Trade, Co-operative and Consumerism on June 22.
In 2008, the ministry abolished price control on steel and cement, amongst others, but maintained control on supply through licencing. Doing away with the retail licences will allow prices of these building materials to be determined by market forces.
“With price controls for cement and mild steel bars already removed, the scrapping of retail licences for cement and mild steel bars completes the Government’s move of making these items completely market-driven,” says Datuk Michael Yam, president of REHDA (Real Estate and Housing Developers’ Association) Malaysia. “We are of the opinion that this is a positive step towards further liberalisation of the market.”
For the Cement & Concrete Association of Malaysia, the move will facilitate the sale and stocking of cement in hardware stores. “Retailers no longer need to worry if they have excess stock above an allowable specified quantity that used to be printed on their storage licences,” Grace Okuda, the association’s executive director, told theedgeproperty.com.
The Malaysian Iron & Steel Industry Federation (MISIF), president, Chow Chong Long feels the scrapping of the retail licences is a natural progression after the removal of the price controls in 2008. “In the short term there will be no major impact to the industry,” Chow says. “But in the long run things might change because some suppliers of steel, not the steel mills, may stock up on steel and this may impact the price. But only time will tell.”
Since January till June 22 this year, 3,000 traders applied for licences for to sell cement and 2,356 for steel.
