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Statement by Dr Tan Seng Giaw, DAP National Vice-Chairman and MP for Kepong on Dr Mahathir's utterance yesterday that the private sector can refuse to invest as a way of scrutinizing the government. 6.3.2002.

The Malaysian Government protects some companies such as Proton nd Megasteel. Excessive protection stifles downstream industry like the hot rolled coils that are used in steel furniture.

Yesterday, the Malaysian Prime Minister Dato' Seri Dr Mahahtir Mohamad talked about the interdependence of the public and private sectors. Each sector played its part.

The Prime Minister believes that in a democratic country, corruption can still occur. But, a corrupt government cannot last for long. The best is a clean government and a properly managed and transparent private sector. This mutually dependent relationship will be sure to hasten prosperity in the country.

Mahathir admits that the 1997 financial crisis exposes irregularities in many companies. Then, he should look at the excessive protection of a small group of companies such as Megasteel as one of the important weaknesses.

MONOPOLY

Megasteel is connected with the Lion Group. It monopolizes such steel products as hot rolled coils and steel pipes. These are used in the downstream industry for making steel furniture such as tables and filing cabinets.

From May 1999, Megasteel has received a protection of 30% import duty. It sells hot rolled coil at RM1,318 per tonne, that is, US$347. This represents a protection of US$142 per tonne, hitting the downstream industry very hard.

Steel industry is complicated. Now, the world is seeing a slump in the industry. At least 25 steel companies in U.S.A. are facing bankruptcy. President Bush is considering helping the industry. Perhaps, he wants to impose 30% import duty on steel products. If so, it will have further effects on the international steel market.

Malaysians are very concerned with the steel industry. For over 20 years, Perwaja Steel saga has been haunting the country with billions of losses. It is a travesty of corporate good governance and transparency.

Now, the Prime Minister must think again about the excessive protection of the monopolistic Megasteel, that is stifling the downstream activities.

Dr Tan Seng Giaw