3/15/2010
NEWS BRIEFS
Report: China Transshipping Fasteners To EU Via Malaysia

Since the European Union imposed 87% antidumping duties on Chinese fasteners starting in February 2009, Malaysia’s monthly fasteners exports to the EU have quadrupled, the Malaysian Star reports.

Some Malaysian companies reportedly are providing repacking services for Chinese fasteners and shipping them with their generalized system of preferences (GSP) and made-in-Malaysia certificate of origin documents, allowing them to enter Europe with respective duties of 1.2% and 3.7%, according to the Star.

Fastener exports from Malaysia nearly doubled to 99,000 tons in 2009, based on information from the Ministry of International Trade and Industry (Miti).

“In the country presently, there are only six major steel fastener producers, of which four specializes in manufacturing mild-steel fasteners, producing collectively 4,000 tons to 5,000 tons of fasteners monthly,” stated Richard Yeap Soon Thong, senior manager of Chin Well Holdings Bhd.

Yeap said repackaging firms are profiting about 7% of the invoice for each shipment of container – about US$20,000.

Malaysian officials are reportedly working with the EU Anti-Fraud Office (OLAF), the port authorities and customs to investigate the matter.

“Some firms also use false documents to obtain certificate of origin, which declares that the goods are of Malaysian origin,” said European Anti-Fraud Office (OLAF) customs unit head David Murphy. “OLAF is working closely with Miti to tackle the problem that also exists at other major trans-shipment hubs such as the Jebel Ali free zone in Dubai and Singapore.”

Murphy said millions of euros worth of Chinese goods are being passed off as Malaysian-made by using the Port Klang Free Zone trans-shipment hub, where imported Chinese goods were transferred to another container and re-exported using the invoice of a Malaysian company.

In response, Malaysia’s trade ministry said it has initiated stronger scrutiny of fastener export, and is now requiring all exporters to provide a letter of indemnity for non-involvement in transshipments of Chinese fasteners to the EU. Other measures include inspecting fastener manufacturers to verify both capability and capacity to produce fasteners for export.

“We are also working closely with other Malaysian authorities such as customs, port authorities, and free zone authorities to ensure there is no transhipment of fasteners from China,” the ministry said in a statement.

Chow Chong Long, president of the Malaysian Iron and Steel Industry Federation, said a lack of access to monthly wire rod data has allowed transshipping to occur.

“The problem is that the Department of Statistics Malaysia is always three months late with its data.”

There is evidence that transshipping is hurting legitimate Malaysian fastener manufacturers who say cheaper China-made fasteners have cost them market share in Europe and forced them to cut prices by 20% or more at a time when they could have achieved double-digit prices increases.

Business leaders urged Malaysian companies to focus production on high-value added products instead of providing transshipping services to Chinese companies, a practice which could undermine the country’s image. ©2010 GlobalFastenerNews.com