KOTA KINABALU, Feb 20 — The Sabah state government has been urged to temporarily suspend the export sales tax on scrap metals.

Effective February 1, 2022, the ban on the export of scrap metal out of Sabah has been lifted by the GRS Sabah government  but in place, the  government has instead imposed a sales tax of RM200 per tonne of scrap metal to be exported out of Sabah effective the same day.

Kota Kinabalu member of parliament Chan Foong Hin said the export sales tax is rather hefty and exorbitant which is equivalent to a 15 per cent sales tax, far higher than 7.5 per cent Crude Palm Oil (CPO) state sales tax, and 5 per cent seafood export state sales tax.

"No doubt, the Sabah government would have the power to impose such export sales tax on scrap metal.

The intention to impose such scrap metal export sales tax could be a means to discourage the export of scrap metal out of Sabah, whilst increasing the state government’s coffers.

"The State government hopes to see the effect would be increasing of the supply or availability of scrap metal within Sabah. It could then encourage the development of downstream industries such as manufacturing, ironworks, blacksmiths, foundries, steel mills, and others,” he said in a statement yesterday.

According to Chan, most of the Sabah Scrap Metals Recycle Association (SSMRA) members are currently facing cash flow problem and bank commitments not only due to the Covid-19 pandemic, but also after eight months of export ban.

Furthermore, there are in fact only one ultimate purchaser of scrap metals in Sabah, Unimekar Sdn Bhd.

With only one ultimate buyer in the market, it is unable to consume the entire quantities of scrap iron in Sabah, leading to a stockpile in most players’ yards which they are stuck with – even if they were to export them out of Sabah, with the hefty export sales tax, they would still make near to no profit.

With Unimekar’s monopoly, they have no reason to offer a higher price to scrap metal sellers, and this is clearly not healthy. What the Sabah government should do right now is to encourage the formation of more companies / factories with the ability to recycle scrap metals in Sabah. It would create a more competitive market and economy.

"Therefore, I call upon the suspension of the imposition of the export sales tax of RM200 per tonne of scrap metal to be exported out of Sabah temporarily and to allow SSMRA’s members to recover their cash flow first. The GRS Sabah Government must allow these industry players to survive first before talking about further development of the downstream economy,” he said.

Yesterday morning, Chan visited a scrap metal yard in Kota Kinabalu under the invitation of SSMRA president Edwin Chen. He was shown stockpiles of scrap metals.

There are some 40,000 tonnes of scrap metals stockpiling in the entire Sabah. — Borneo Post