by Parliamentary Opposition Leader, DAP Secretary-General and MP for Tanjung, Lim, Kit Siang, in Penang on Saturday, 7th May 1994:
MITI should ensure that protection given to Titan for the PE (polyethelene) product in terms of 30 per cent tariff and AP is not at the expense of the closure of the export plastic factories within a year
The Minister of International Trade and Industry, Datuh Rafidah Aziz should order a detailed review of the protection given to Titan Polyethylene (M) Sdn. Bhd. for the PE (polyethelene) plastic resin in terms of 30 per cent tariff and AP to ensure that this is not at the expense of destroying the export plastic factories forcing them to close in a year.
The present crisis in the plastics industry caused by giving Titan the monopoly on PE and PP (polypropylene) is because Titan is unable to meet the needs of plastic manufacturers in Malaysia, especially for those catering for the export market.
I understand that Titan is a Taiwan specialist in LLDPE (or low-linear density PE), with no history in HDPE (High-density PE) production. The Malaysian market, however, is overwhelmingly for LPDE (Low-density PE) and HDPE (High-density PE). Furthermore, the international export market is basically a HDPE specialist market, as for shopping bags for the markets in Japan, United Kingdom, Singapore, the European community and the United States.
By giving Titan the monopoly over the PE resins market, MITI has created a crisis in the plastics industry for users of LDPE and HDPE, who constitute the bulk of the Malaysian plastic manufacturers.
Because it is not a specialist in HDPE production, the HDPE it produces, is not comparable or competitive, both in quality and price, with international HDPE resins.
At present, Malayaia is the world’s third biggest exporter of plastic bags after China and Thailand.
This position is now jeopardised with the imposition of AP for PE and the granting of the monopoly to Titan. This is because Malaysia’s export factories could be killed by Titan’s current pricing for HDPE which is at RM2,010 per ton as compared to the Asian price of RM1,480 per ton available to Malaysia’s competitors!
Furthermore, Titan is unable to produce the HDPE resins to meet the international grades demanded by the export markets. This is one main reason why plastic manufacturers who cater for the export market continue to import HDPE from overseas sources despite the imposition of 30 per cent tariff on PPE resins last December.
These local plastic manufacturers who are competing for the export market complain that they should not be forced to use a grade of HDPE produced by Titan which are net acceptable by the international market – which would itself cause the loss of such export markets eventually.
In fact, Malaysian plastic exporters are worried that the AP imposition and the monopoly position given to Titan has gravely undermined their competitiveness and even survival capac¬ity in the international export market and they see the destruc¬tion of 25-years of manufacturing in this field.
Titan has also caused havoc to Plastic manufacturers who use LDPE, as they are being bullied by Titan to switch from LDPE to LLDPE since Titan does not manufacture LDPE.
MITI should not undermine the competitiveness of plastic manufacturer in the export market. The long-term solu¬tion must be the local production of PE resins particularly HDPE which are comparable in quality and competitive in price to enable Malaysian plastic manufacturers to he more competitive in the export market.
The Titan PE plant has failed on this score, creating havoc for the plastics industry. The question is whether MITI could learn from the mistakes of Titan and ensure that the second PE plant in the country, namely the Trengganu Petrochemical Project, would be able to provide local plastic manufacturers with the PE resins with the quality and pricing which would not undermine their export competitiveness!
In the meantime, MITI should remove the AP restriction for the import of PE resins, as the 30 per cent tariff protection ,given to Titan for PE resins should be adequate.
The MITI should be sensitive and responsive to the problems faced by the Plastics industry, because it involves over 1,000 plastic manufacturers with over 60,000 workers. Over 21 per cent of the plastic manufacturers are in Penang. In 1993, the Malaysian plastics industry recorded a total turnover of US$800 million, which represents a ten-fold increase during the 20 years since 1974. Total exports last year was estimated at US$200 million, about four times the, 1983 figure.