KUALA LUMPUR: While the government’s lifting of the ceiling prices of cement was welcomed by analysts and cement producers, the construction industry has called for the removal of the 10% levy imposed on imported cement. Master Builders’ Association of Malaysia (MBAM) president Patrick Wong said the levy could only mean higher costs for the construction industry.

“This 10% tax does not make sense, as it contradicts the Asean Free Trade Area (Afta) rule, where cement will only be taxed at 5% and 0% come 2010,” he said, adding that it was only viable to import cement from Asean countries for logistical reason. “Portland cement, which is no longer under price control, makes up the bulk of cement used in the local construction industry, hence the removal of the levy would help reduce our costs. This is unlike the liberalisation of the steel industry which does cover many categories of steel,” Wong said.

Research houses ECM Libra and Hong Leong Research were positive about the government’s move, saying it would alleviate the manufacturers’ cost pressure.

ECM Libra has upgraded the building materials sector to “overweight”, with two biggest listed cement producers Lafarge Malayan Cement Bhd and YTL Cement Bhd its top picks.

The prices of coal and paper bags, key cost components in cement production, had increased by more than 50% and 25%, respectively, since December 2006, ECM Libra said in a research note.

Share prices of cement manufacturers on Bursa Malaysia were buoyed by the ceiling price removal.

At the close of trade yesterday, Lafarge Malayan Cement Bhd was up 20 sen to RM4.54, YTL Cement Bhd added 10 sen to RM4.80, while Cement Industries of Malaysia Bhd (CIMB) ended unchanged at RM5.80.