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South East Asia

China has recently implemented stricter inspection measures covering shipments of scrap from Malaysia to its domestic market. This initiative aims to create a more stringent control regime, with measures put in place to verify the documentation, quality and quantities of scrap shipments from Malaysian sources. By intensifying inspections, the Chinese authorities are looking to prevent exports of inferior or counterfeit materials and to ensure only genuine and authorized consignments flow into their country.

This increased focus on inspection and scrutiny aligns with China’s commitment to safeguard its domestic industries and consumers by guaranteeing the authenticity and reliability of imported scrap. Authorities are particularly vigilant when it comes to smuggling activities that may undermine the quality of products and subsequently impact the various sectors relying on these raw materials.

Malaysia has been working closely with China to streamline the scrap export process to ensure compliance with international standards and regulations. Through a constructive dialogue, both countries are aiming to address the challenges associated with unauthorized scrap metal shipments.

Recognizing the importance of bolstering its export regulations and scrap standards, Malaysia has recently introduced a proposal to enforce a 10% tariff on exports of all scrap metal categories except for aluminium ingots and silicon sheets. This initiative is aimed at fortifying the country’s position in terms of controlling and managing its scrap metal trade, ultimately promoting sustainable practices and fair trade as well as ensuring the highest standards.

If enforced, the tariff would most likely lead to an increase in the cost of imported Malaysian scrap and could disrupt existing supply chains relying on this material. Concerns have already been raised regarding the potential increase in cost.

Many international businesses have established partnerships with Malaysian scrap suppliers and have come to depend on their material. However, the proposed tariff could lead to a significant re-evaluation of these partnerships as businesses assess the economic viability and logistical challenges associated with potential cost increases and supply chain disruptions.

Owing to the prevailing circumstances, some Chinese-owned companies in Malaysia are currently considering the possibility of relocating their businesses elsewhere.