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South East Asia

On November 1, the Malaysian Ministry of International Trade and Industry (MITI) issued a statement saying it will not enforce its proposed higher purity standards for imported metal scrap. It is a brief reprieve, with the extension only delaying the implementation of the new guidelines until December 31 2021. MITI has announced: “The interim measure will continue to be enforced until 31 December 2021. MITI believes the extended interim period will allow the industry to undertake the necessary preparations towards the Certificate of Approval (CoA) implementation.”

The requirements for obtaining the CoA remains a big question for scrap recyclers and traders globally, and the same goes for what responsible body will conduct these inspections. The overall costs and clear instructions relating to this new inspection process have yet to be determined.

Malaysia’s sizeable appetite for metal scrap has grown in the past two years given China’s more restrictive import standards. It has quickly become a leading destination for the world’s non-ferrous scrap, with secondary aluminium alloy and brass producers leading the way. While scrap recycling businesses within the region are operating at quite high production levels owing to a strong localized labour force and healthy demand from neighbouring China, these new restrictions will undoubtedly create much disruption in an already-bruised economy that is only slowly recovering from the effects of the global pandemic. These proposed regulations will place Malaysia in the unenviable position of potentially ceding its significant market share to its neighbours while simultaneously surrendering much-needed investment in recycling infrastructure.

While terminal metal prices are trending near historical highs, they are not indicative of a robust or slowly recovering market. Unprecedented global supply chain disruption continues to be fed by the pandemic, which remains front and centre. Undoubtedly, COVID has put the world economy in its most precarious position since the global financial crisis of 2008 and 2009. With all this in mind, implementation of new guidelines for metal scrap imports into Malaysia appears to be an untimely response to an already mature and thriving industry.