Unfair to protect one company


  • Nation
  • Saturday, 04 Oct 2003

COMMENT BY WONG CHUN WAI

IT’S an unusual decision but sure enough, it has generated tremendous controversy. The decision by the Government to impose an anti-dumping duty on imported newsprint has led to a hue and cry among newspaper publishers, and quite rightly, too. 

The decision simply means that newsprint would cost more and that newspaper readers will have to fork out at least 20 sen more per copy – and all in the name of protecting the newsprint industry. 

That would eventually affect the millions of buyers of magazines, irrespective of whether these are entertainment, sports, lifestyle, women or fishing publications, as the cover prices would gradually increase.  

But what International Trade and Industry (Miti) Minister Datuk Paduka Rafidah Aziz isn’t saying is that the newsprint industry is actually only one company, namely Malaysian Newsprint Industries Sdn Bhd (MNI), while the affected parties include thousands of publishers with over 30,000 workers. 

To protect one company, in the name of supporting a Malaysian industry, publishers have been told that they should buy from MNI, even if MNI sells more expensively. 

That is the logic of the whole exercise when we strip away the economic and trade jargon. There is really nothing patriotic about the whole questionable exercise because MNI is not a national project or a government concern. 

It is simply a private company – one company, if I am allowed to emphasise again – with shareholders comprising of Norske Skog, a Norwegian paper manufacturer (34%), Hong Leong Industries (34%), New Straits Times (21%) and Rimbunan Hijau Group, the owners of Sin Chew Daily (11%). 

MNI started operations in 1999 to establish local supply of competitively priced world premium grade newsprint but its rated capacity remains at 250,000 tonnes per year while the Malaysian consumption is 400,000 tonnes per year. 

Publishers turn to overseas suppliers simply because it is cheaper and these suppliers are able to meet the demand of the buyers. It makes economic sense because production costs would be cheaper and readers, in turn, would be given affordable products. 

The problem started when MNI lodged a petition in 2002 to the Government claiming newsprint dumping by suppliers from Canada, the Philippines, South Korea, Indonesia and the United States. At that time, the price of newsprint was at its cyclical low. 

After preliminary investigations, Miti imposed a provisional anti-dumping duty of between 7.91% and 42.24% on the mentioned countries with effect from May 28, 2003, for 120 days. 

During this period, Miti would investigate further and if there was indeed dumping, the duty would be imposed for five years. It all seemed reasonably fair and it was proposed in the recent Budget that publishers be exempted from the anti-dumping duties only to the extent of the quantity that could not be supplied by MNI. In other words, the anti-dumping duties would remain. 

But there are dire implications from thereon – newspaper publishers, already hard hit by rising costs and other challenges, would be further burdened by the duties. 

Newspaper publishing, unlike other businesses, is cost intensive that needs heavy reinvestments every five to 10 years. 

Even prior to the imposition of anti-dumping duties, publishers were already paying 5% tariff on newsprint imported from other Asean countries and 10% for imports from non-Asean countries. 

Then, there is the question of what happens should the current price of US$450-US$500 (RM1,710-RM1,900) per tonne shoot up to say US$850 or US$1,000 (RM3,230 or RM3,800) per tonne. Should publishers continue to pay anti-dumping duties, even as MNI continues to make good profits then? 

As MNI is a monopoly, should the company increase its production to 100% of local requirements, purchasing from MNI would affect longstanding relations between publishers and other suppliers, which have been reliable. 

To face these consequences, publishers would have no choice but to resort to cost-cutting measures such as lowering print wastage, decreasing pagination and downsizing workforce but it would not be enough to cover the additional burden. 

MNI, like any private concern, must be responsible for its investments. For a long time now, it is generally well-known that newsprint market prices are subject – and extremely sensitive – to the supply and demand situation. 

Newsprint prices in South-East Asia tend to be more volatile than other parts of the world – they have always been lowest in oversupply times and highest in periods of scarcity. Surely, MNI, in committing hundreds of millions into this business, must have been aware of this situation when it started its mill. 

The Government, in protecting the interest of the consumers, should allow newsprint prices to be determined by supply and demand forces, encourage competition as in Indonesia, for example, which allows its mills to be competitive, so that MNI will adopt measures to face competition, rather than rely on government tariff. 

MNI should be encouraged to compete worldwide, based on its own efficiencies and marketing prowess, and thus earn foreign revenue rather than to concentrate merely on local support. 

There are new challenges ahead in the next few months – certainly the Government would want the rakyat to buy newspapers to read about its plans and policies. 

The last thing the Government would want is for ordinary Malaysians to stop buying newspapers, just because of a price increase caused by an action to protect one private company. It is even more crucial when the Government is encouraging the people to cultivate the reading habit. 

Lest we forget, local publications are also Made-in-Malaysia products and every effort must be made, by the Government, to support them.  

Related articles 

Association: Newspapers may cost at least 20 sen more 

Rafidah: Move to protect newsprint industry 

Decision on newsprint will affect consumers, says CAP 

Newsprint ruling ‘strange' 

Sabah, Sarawak papers want cheaper newsprint 

Vendors brace for drop in sale of newspapers

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