Malaysia: Malaysian Ringgit woes cast shadow over cement industry

Byszheng

Updated Fri, 23 Oct 2015 11:04:00 GMT

The protracted slump of the Malaysian Ringgit against the US Dollar, which has plagued importers and harmed consumer sentiment with the threat of imported inflation, has also cast its shadow over the cement industry.

The Cement and Concrete Association of Malaysia (C&CA) Chairman Datuk Yeoh Soo Keng said that some items crucial to the cement industry, such as coal and gypsum, are purchased in US Dollars. "Coal and gypsum, which are important components of our industry, are imported in US Dollars. With the current weak Ringgit levels, this has an impact on the industry," said Yeoh Soo Keng, who is also the CEO of YTL Cement Bhd, a member of C&CA.

Lafarge's former president and CEO Bradley Mulroney said that the weak Ringgit had also impacted imports of clinker. "The import of clinkers has gone up by about 20% due to the impact of the weak Ringgit," he said.

Hume Industries Bhd Managing Director Quah Thain Khan said that cement players are working to mitigate the impact of the weak Ringgit by managing the usage of raw materials, such as coal, more efficiently. "We also negotiate for cheaper sources of coal," said Thain Khan, adding that the industry is also challenged by the increasing cost of foreign labour. "I think that the industry needs to place more emphasis on automation and be less labour-intensive by investing in precast concrete systems and industrialised building systems."

International Trade and Industry Minister Datuk Seri Mustapa Mohamed said that the construction industry would see 'reasonable growth' in 2016, fuelled by infrastructure projects under the 11th Malaysia Plan, such as Mass Rapid Transit Line 2, Light Rail Transit Line 3 and the Sungai Besi-Ulu Kelang Elevated Expressway. "It will not be double-digit growth, but it will be reasonable growth. As for the slow-down in the property sector, the softening is more in the high-end housing segment; the affordable housing segment continues to be reasonably strong," said Mustapa.

Mustapa added that Malaysia's cement and concrete industry is an important economic pillar, contributing about 4% of the country's gross domestic product. "The industry has also contributed to Malaysia's export earnings, with exports to countries such as Australia, Sri Lanka, Indonesia and India, but, at the same time, Malaysia is still a net importer when it comes to clinker." From January to August 2015, Malaysia imported US$81.4m of clinker, compared with US$77.9m in the same period of 2014. "It is hoped that more integrated cement plants will be set up in Malaysia to produce our own clinker and reduce imports," said Mustapa.