 |
| Illegal scrap exports |
MACC’s “Ops Metal” Targets $223 Million Losses in Unpaid Scrap Export Duties
The Malaysian Anti-Corruption Commission (MACC) has launched a nationwide crackdown on scrap export duty evasion in Malaysia. Operation "Ops Metal" began in July, targeting illegal steel scrap exports that avoid the 15% export levy. Backed by the Malaysian Steel Association (MSA), the operation aims to restore market integrity and ensure fair trade.
The MSA emphasizes the impact on domestic steel production and GDP. Malaysia’s steel sector represents 2.5% of national GDP and depends on scrap as a low-carbon raw material. Illegal outflows raise local raw material prices and reduce supply for domestic electric arc furnace (EAF) operators. As a result, downstream producers face rising costs and disrupted supply chains.
Malaysia has lost over MYR 950 million in revenue over six years. MACC reports tax losses exceeding $223 million due to illegal shipments. Simultaneously, the outflow distorts regional trade, affecting key buyers like Bangladesh and Southeast Asian neighbors. The MSA is calling for stricter policy enforcement to prevent these outflows and bolster Malaysia’s circular economy goals.
Regional and Global Implications of Malaysia’s Scrap Policy Shift
Illegal scrap exports undermine regional decarbonization efforts. As Malaysia strives to expand its green steel footprint, uncontrolled scrap exports compromise local low-carbon steel production. This hinders national emissions reduction strategies and complicates the ASEAN steel trade ecosystem.
Neighboring countries are also tightening controls on scrap trade. India has begun GST audits of scrap dealers, while Poland is witnessing rising ferrous scrap exports, mainly to Turkey. Ukraine is proposing a zero export quota for ferrous scrap in 2025. These developments suggest a global tightening of scrap trade rules as governments prioritize industrial decarbonization and supply security.
Over 77% of global steel production is now under export restriction policies. This trend reflects growing protectionism in secondary raw materials. For Malaysia, failing to act could weaken its competitiveness in regional markets and disrupt domestic re-industrialization agendas.
ScrapInsight Commentary
Malaysia’s clampdown on scrap export duty evasion signals alignment with global trends in resource protectionism. The enforcement surge will likely stabilize local scrap prices, support EAF operators, and encourage policy cohesion. However, enforcement effectiveness and long-term regulatory clarity will define investor confidence and market balance in Southeast Asia.
