Please allow me also to take this opportunity to brief YBhg. Datuk Ir. Ahmad Fauzi on what MCMA is all about :-

Transcription

1 MS IEC Outreach Conference On Electrical Installations on Buildings and Electric Cable Designs & Standards Plenary Hall, Shah Alam Convention Centre (SACC) 10 th to 12 th September 2012 Opening Speech by MCMA President, YBhg. Dato Dr. Abdul Razak Bin Abdul YBhg. Datuk Ir. Ahmad Fauzi bin Hasan, CEO of Suruhanjaya Tenaga Ir. Engineer Fu Wing Hoong, President of TEEAM On behalf of MCMA, I would like to bid a very warm welcome to YBhg. Datuk Ir. Ahmad Fauzi, CEO of Suruhanjaya Tenaga and Ir. Engr Fu Wing Hoong, President of TEEAM to today s auspicious event. Our deepest appreciation also to YBhg. Datuk Ir. Ahmad Fauzi for his kindness to take time to officiate the opening of our outreach program on Electrical Installation on Buildings and Electric Cable Design and Standards. Please allow me also to take this opportunity to brief YBhg. Datuk Ir. Ahmad Fauzi on what MCMA is all about :- Established in 1980, it comprises of manufacturers of power and telecommunication cables and conductors with the objectives :- 1) To bring together the power and telecommunication cable manufacturers with the purpose of enhancing the reputation of the industry as a responsible and ethical association of manufacturers ; 2) To bring about a degree of cooperation between manufacturers so as to improve the efficiency of the industry and the standard of product and service to the market. 3) To actively promote the presence and representation of the Association in the Malaysian Cable and Wire industry through constant liaison wand meetings with specific Ministries, government agencies and related authorities. 4) To participate in conferences or forums organized by the Government and other sectors, in relation to plans/strategies or any other matters concerning the development of the local cable and wire industry.

2 5) To promote the products of MCMA under the Buy Malaysian campaign such as conduct seminars or organise or participate in overseas trade missions. 6) To participate in national standard bodies to help set or regulate both National and Regional standards; and 7) To keep members aware of the possible impact of AFTA/WHO on the industry, and to ensure the Government is kept informed of any possible impact. Ladies and Gentlemen, Currently, MCMA has 20 members representing approximately 85% of the industry and we are continuously inviting more manufacturers ( fyi, there are about 30 non-member manufacturers, mostly of the small and medium size ) to join us to further strengthen the Association in pursuing our common interests. Our members come from public and private limited companies, foreign and local joint ventures and also wholly foreign-owned businesses. If I may quickly walk you through the industry itself :- On Technology : Our members factories are modern and well-equipped as they have invested substantially in the most up-to-date production lines. On Research and Development :- - as an industry, we are at par with other regional players. - our manufacturers are sufficiently competitive to compete in the regional market as they have the technology edge, either on their own or support by their foreign partners. On Quality : The Malaysian Cable industry operates to the highest standards. Most manufacturers hold type test certifications from both foreign and local authorities. On Cost Competitiveness : The Malaysian cable industry has the capability to be world class players as seen from our modern plants and machineries, relatively low labour costs and technology back-up. However, this potential is restricted by the relatively high cost of raw materials and the size, by world standards, of most companies- which do not warrant for economies of scale.

3 On Export Markets : - Members currently export to 19 countries including the USA, Japan, ASEAN countries and Australasia; - Regional export markets are extremely competitive due to the depressed economic situation and fierce competition from other suppliers, namely Korea and Taiwan. On Competitiveness in export markets : - The key issues are foreign manufacturers, namely from Korea. They are (i) operating from a heavily protected home market which enabled them to offer low prices for marginal export business and (ii) they are supported by Government export incentives. On the liberalization of foreign equity participation in the cable industry : - MCMA supports foreign participation with existing players. - MCMA however, strongly oppose foreign investment in new cable-making operations because the capacity currently available, is in excess. Furthermore, such investments would be a misallocation and a waste of resources. On Market Trends : - the local cable market is estimated to be more than Rm2 billion per annum. - the industry was severely affected. Most manufacturers are either facing losses or barely making profit. - the 2 biggest end-users of the industry are : Tenaga Nasional and Telekom Malaysia. On AP and Tariff Protection : We have to retain current levels of protection. The post-effects of the economic crisis are still painful in the sense that :- i) The demands from TNB and Telekom Malaysia have been severely reduced. ii) The cable industry is running under capacity.

4 iii) MCMA members are facing unfair competition from sub=standard cable which are either produced locally or illegally imported from overseas. On Competition Law MCMA, including all other Associations are facing yet another new challenge with the formation of MYCC. The cable industry is currently undergoing a turbulence due to the existing price war amongst its members, particularly those involved in TNB prices. Prices have hit rock bottom to the extent of no profit or even below cost. In the past, TNB has practiced negotiated tenders via consortiums, however, TNB had, since 2010, abandoned that practice and adopted an open tender system instead. This practice has had a drastic impact on the industry, resulting in a price and supply crisis. The Association feels responsible in finding a solution to the problems which would not only affect its members but also TNB which is also facing shortage of supply. Should the situation be allowed to prolong, it could result in a national energy crisis. In an effort to protect the interest of its members, MCMA would need to come up with a formula in regularizing the pricing. This would not be possible should MCMA be under the purview of MYCC as such exercise would be considered/deemed illegal. By virtue of the fact that ST is the enforcement authority for cables, particularly cables (size 0.5mm 2 to 35mm 2 ), it would be logical to state that MCMA should automatically come under its purview. Further, MCMA could act as a one stop service centre to assist ST in regulating the industry. It is also to be noted that unlike other countries, Malaysia is not quite ready or had not reached the self-regulating status so cooperation from the Association would be most useful. ST certification is currently only based on products. We have been informed that ST will now extend the said exercise to cover all individual manufacturers and importers who would be required to fulfill/comply certain criteria before getting the certifications. Pricing is totally out of the issue for ST whose enforcement is solely on compliance to quality/standards, however there is a clause/provision in the electrical supplies act which permits competition at reasonable price. MCMA has requested ST to make MCMA as a precedent and use safety as the requirement. MCMA is not against competition but competition has to be healthy to ensure that quality is not being compromised. As the raw material price is very standard/similar, ST s enforcement on quality alone

5 would indirectly have a control the prices. In the case of TNB tender, MCMA, as a responsible Association, does not have the intention to come up with excessive prices but sees the necessity to regulate the price. For that to happen, it would be crucial for a benchmark price to be in place. The meeting also touched on the need to distinguish between non-standard and sub-standard cables. In the case of sub-standard cables, there is an essence of high-profiteering, fraud, danger, absence labeling, embossing, etc while on the other hand, non-standard products is quite different. For example, the issue on 1.25mm 2 cables. In the IEC and MS, this standard is already obsolete while in the BS (British standard), the standard is still in existence. The issue has been brought up at the ISCE committee but there was a request that the issue be referred back to ST. During the meeting, En. Rahim mentioned that ST is aware of the issue and that they are in discussion. Ladies and Gentlemen, Having said that, the Malaysian cable industry is currently faced with 4 critical challenges; - The escalating cost of raw materials namely copper and aluminium on the world market has resulted in heavy losses in the accounting books of most cable manufacturers. - The proliferation of imported cables which are of sub-standard quality. Despite the AP protection empowered to MCMA, theses cheap cables are still making their entry into the country by smugglers. - The maturity of the cable industry in Malaysia does not justify for the existence of too many players. Out of about 50 manufacturers, about 30 are still unregistered with the Association. Furthermore, more than half the cables produced by the manufacturers are consumed by the 2 government linked companies (or GLCs ) namely TNB and Telekom Malaysia. Ladies and Gentlemen, Thank you for bearing with me and listening to the woes of the industry. One behalf of MCMA, I would like to extend our appreciation to the co-organisers of our program namely, TEEAM and iknoweldge. Thank you to the participants for making time to join the program. I hope it will be of great benefit to you. Special thanks to the organizing committee and all those who have directly or indirectly contributed to the successful organization of this program. Last but not least, once again, our warmest welcome and deepest gratitude to YBhg. Datuk Ir Ahmad Fauzi for taking time to be with us today. Thank you sir.

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