VZCZCXRO3206
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHKL #0721 2400813
ZNR UUUUU ZZH
R 280813Z AUG 09
FM AMEMBASSY KUALA LUMPUR
TO RUEHC/SECSTATE WASHDC 3154
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHGV/USMISSION GENEVA 1765

UNCLAS KUALA LUMPUR 000721 
 
SENSITIVE 
 
SIPDIS 
 
DEPT FOR EEB/TPP/BTA AND EEB/CBA 
DEPT PASS USTR: K Ehlers 
GENEVA FOR USTR 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EINV MY
SUBJECT: Malaysia's New Standards for Iron and Steel product Imports 
Create Problems for US Firms 
 
Sensitive but Unclassified - Not for Internet Distribution 
 
¶1. (SBU) Summary:  Malaysia's new policy on iron and steel products 
is designed to reduce tariffs and liberalize the industry, but new 
standards and testing requirements are hampering industrial goods 
manufacturers who import specialized steel components.  Several 
American manufacturing companies are experiencing delays or extra 
costs because of this.  In response to complaints, the Ministry of 
International Trade and Industry (MITI) has introduced temporary 
measures to alleviate the immediate problems.  End Summary. 
 
¶2. (SBU) Comment: The new policy and reduced iron and steel tariffs 
may be a step towards full liberalization of the industry, but it is 
also designed to "enhance competitiveness" of Malaysia's domestic 
steel products manufacturers.  The mandatory standards and required 
testing so far are mostly hurting companies in Malaysia using 
specialized steel components not produced locally.  These firms are 
often in electronics and industrial goods sectors.  US firms have 
complained that the mandatory testing is prohibitively expensive and 
time consuming for industrial components which often imported in 
very small quantities.  Fortunately, Malaysia appears to be willing 
to revise the policy to assure that export industries will continue 
have access to the required components.  End Comment. 
 
¶3. (U) Effective August 1, 2009, Malaysia introduced a revised 
policy for the iron and steel industry in Malaysia.  The new policy 
abolished most import restrictions and duties within the steel 
industry and was designed to allow steel product makers to 
competitively source their raw materials.  The policy also 
introduced mandatory standards on imported iron and steel products, 
requiring testing of all imported products for standards 
compliance. 
 
¶4. (SBU) Representatives of an American oil exploration and drilling 
products and services company told EconOff on August 21 that the 
company had experienced delays up to several weeks in importing key 
components for its products from Singapore due to the new standards 
and testing requirements.  Because of the delays, the company had to 
substitute product shipments from their Malaysian facility with 
product from its other manufacturing facilities.  After complaining 
to local investment authorities and raising the issue with MITI, the 
company was able to obtain a temporary exemption from testing, and 
their components were released from customs.  According to industry 
representatives, companies in other segments, especially electronics 
and electrical products, have experienced similar delays due to the 
new standards. 
 
¶5. (U) Ministry of International Trade and Industry (MITI) Deputy 
Secretary General Kamaruddin Ismail notified Post on August 25 via 
fax of GOM's decision to introduce several temporary measures to 
address the concerns/complaints they've received various groups of 
importers, including the following: 
a) Temporary exemption from the requirement for Certificate of 
Approval (COA) to facilitate the backlogs at Customs entry points, 
effective from August 13 until October 12, 2009. 
b) MITI and the SIRIM QAS Sdn Bhd (The company charged with the 
testing of iron and steel products for standards compliance.) are 
identifying the list of non-critical iron and steel products to 
simplify the compliance to the COA. 
c) SIRIM QAS will offset all the fees and charges incurred during 
August 1 to August 12, 2009. 
d) The issuance of COA will be decentralized at the designated SIRIM 
QAS branch offices nationwide. 
e) SIRIM QAS is undertaking outreach programs to the industries to 
disseminate information on the requirement of the mandatory 
standards for iron and steel products. 
 
¶6. (U) Post will continue to follow-up on this case. 
 
KEITH