Energy-intensive players to pay SST


KUCHING: Energy intensive ferroalloy and polysilicon manufacturers in Sarawak will have to pay state sales tax (SST) of 1.5% from Sept 1, 2024.

The new tax will boost the Sarawak government’s coffer in addition to the current SST imposed on petroleum products, crude palm oil and palm kernel oil, aluminium and selected timber products as well as lottery.

Sarawak Deputy Premier and Second Minister of Finance and New Economy Datuk Amar Douglas Uggah Embas described the SST on the export of ferroalloys and polysilicon as a “fair and reasonable rate” on the affected companies as they are also enjoying other tax incentives from the federal government and favourable electricity rates from Sarawak.

The manufacturers are supplied with renewable hydro energy for their manufacturing operations.

“The revenue generated from this (new SST) source will give us fiscal flexibility in enhancing our socio-economic development efforts which would include, among others, implementing clean and renewable energy initiatives.

“The Sarawak government will continue to explore new opportunities to enhance and diversify its revenue sources.

“This is imperative as Sarawak continues vigorously in pursuing its development agenda so that no one will eventually be left behind,” he said in the recent Sarawak state assembly session.

The state government has also decided to charge a “Forest Ecosystem Fee” (FEF) of 5% on the value of traded forest carbon, and to levy an annual land use tax for carbon trading based on the size of the licensed area.

No dates have been set for the implementation.

Ferroalloy smelting and polysilicon plants are the backbone and among the pioneer industries set up in the Samalaju Industrial Park (SIP), Bintulu under the Sarawak Corridor for Renewable Energy.

Currently, three multi-national corporations – OM Holdings Ltd (OMH), Pertama Ferroalloys Sdn Bhd and Sakura Ferroalloys Sdn Bhd – all own and operate ferroalloy smelting plants at SIP.

Ferroalloys are used to produce steel and alloys.

Pertama Ferroalloys’ shareholders are Asia Mineral Ltd, Nippon Denko Co Ltd, Carbon Capital Corp Sdn Bhd and Shinsho Corp.

The company’s plant achieved full production of 264,000 tonnes of manganese alloys per annum in 2018. In late 2022, Pertama Ferroalloys announced investment of US$600mil in its phase two expansion project.

Sakura Ferroalloys is a tripartite joint venture between South Africa’s Assmang Pte Ltd, Japan’s Sumitomo Corp and Taiwan’s China Steel Corp. The company’s Bintulu plant produces some 240,000 tonnes of high carbon ferromanganese per annum for the markets in Asia, Europe, India and the United States.

Sakura Ferroalloys is constructing a RM1.41bil sinter plant, which is expected to be operational in second half of 2024.

Dual-listed on Australia Securities Exchange and Bursa Malaysia, OMH, via wholly-owned subsidiary OM Materials (Sarawak) Sdn Bhd, produced 139,529 tonnes of ferrosilicon and 294,432 tonnes of manganese alloys in 2023 and sold 135,545 tonnes and 290,770 tonnes of manganese alloys respectively last year.

South Korean chemical company OCI plant in SIP produces about 30,000 tonnes of polysilicon per annum, which equates to 10GW of solar power generation. The company announced in August 2023 that it would invest RM2.8bil to produce polysilicon for the semiconductor industry.

Polysilicon is a raw material for the solar photovoltaic and electronic industries.

On June 1, 2023, Sarawak started to levy SST on the export of selected timber products,and collected RM14mil last year.

Uggah expects this to increase to RM33mil in 2024.

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feroalloy , polysilicon , manufacturing , SST ,

   

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