With consolidation on the horizon, related policies will need to be personalized in order to be effective

China’s rationalization of its steel industry has taken a step further by instituting a personalized approach to output cuts. With environmental regulation still as their spearhead, authorities have elected to drop a “one-size-fits-all” approach—requiring steel producers to cut as much as 50% of existing output, regardless of their size and emission levels—and instead, will regulate cuts based on emission levels of individual steel makers. The personalization strategy is a positive incentive towards the rationalization goal, and as a best practice benchmark, should be applied to the Malaysian context as the local industry presses forward with its consolidation ambitions. A unilateral consolidation policy that generalizes small, medium, and large steel makers as well as corporates and family owned businesses into one will not succeed very far in the process.

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