Automotive, data centre, aerospace offer higher-value opportunities for steelmakers – SIM

Malaysia's iron and steel industry stands to gain from expanding into higher-value production sectors, according to Deputy Investment, Trade and Industry Minister Sim Tze Tzin. The government is transforming the industry's focus from traditional construction and infrastructure towards high-tech fields like automotive, data centres, and aerospace.

Under a new incentive mechanism (NCM) set to launch next year, car manufacturers seeking lower excise duties will be required to deepen localisation. This means they must source more materials locally, including automotive-grade steel from domestic producers. Sim expressed optimism that this move would open up the automotive market to Malaysian steelmakers, despite challenges such as price competition and the need to meet higher safety standards.

Additionally, Malaysia's status as a major data centre hub in Asia presents opportunities for the steel industry. The government is encouraging domestic producers to supply products like server racks, cables, and wire harnesses. One industry player has already expressed interest in supplying server racks for data centres, viewing it as a positive development.

In the aerospace sector, Sim highlighted the potential for Malaysia's maintenance, repair, and overhaul industry to pursue higher-margin business. He cited a European company producing high-technology steel for aircraft structures as a precedent for the steel industry to move into more complex and lucrative applications.

To support these investments, the government has already provided incentives such as pioneer status and investment tax allowances to steelmakers. For further complexity, the government pledges additional support in the form of more incentives. The overarching goal is to help the domestic steel industry innovate and develop more complex products to meet the demands of a rapidly advancing, high-technology market.