Madius
KOTA KINABALU: Although the selling price of cement in Sabah is higher compared to West Malaysia, it is reasonable due to extra costs incurred.
The price of cement between Sabah and West Malaysia is inconsistent as pricing relies on cost of production which includes cost of raw materials, shipping and logistics, as well as low output quantity in Sabah.
Deputy Chief Minister cum Minister of Trade and Industry Datuk Seri Panglima Wilfred Madius Tangau explained this when answering a question by Bingkor assemblyman Robert Tawik at the State Assembly sitting yesterday, on whether the State government plans to re-evaluate cement pricing in Sabah.
“Cement Industries (Sabah) Sdn Bhd (CIS) imports clinker, the main raw material in cement production used in West Malaysia as well as overseas.
“This is because CIS doesn’t produce clinker and only processes it to make cement, unlike manufacturers in West Malaysia with integrated cement plants.
“Because of that, the structure of production cost for CIS is different compared to West Malaysian manufacturers, therefore impacting the selling price,” said Madius.
In fact, Madius went on to say tha cement manufacturers in West Malaysia are facing losses due to excess capacity, with demand of only 20 metric tonnes compared to a capacity of 40 metric tonnes.
He added that the selling price of cement in Sabah had not gone up in the last 10 years, although there was a marked increase in price of raw materials due to currency drop.
“CIS even lowered the price of cement as much as six per cent for the east coast market of Sabah when the bulk cement terminal began operating in Lahad Datu port in early 2009,” he said.
Madius also said the Sabah Economic Development Corporation (SEDCO) and CIS were in talks to build a clinker factory in Sabah, to further reduce cost and ensure adequate clinker supply in the long run.