The cement industry, one of the emerging sectors of the country, is currently having tough time due to a variety of issues such as imposing additional import duty (Customs Duty-CD) on clinker, the main raw material of cement which announced in FY24 budget; Additional Income Tax (AIT), Un-adjustable AIT, a fuel shortage, high transportation costs, dollar crisis and an increasing currency value.
President of Bangladesh Cement Manufacturers Association (BCMA) and Vice-Chairman of Crown Cement Md Alamgir Kabir presented this information in a press conference at a hotel in Dhaka on Monday.
He summarized the current crisis of the Bangladesh cement industry in the following order:
In the budget of the FY24, imposition of customs duty of Tk700 per metric ton on clinker.
Cement manufacturers have been demanding for a long time that the customs duty on clinker, the main raw material of the cement industry, should be reduced from Tk500 per metric ton to Tk200 per metric ton.
But in the current budget, instead of reducing CD, it has been increased from Tk500 to Tk700 per metric ton (CD), as a result of which the cement manufacturers are very disappointed.
Customs duty on key raw materials of an industry is usually around 5% of the import value. But the Customs Duty on clinker stands at around 12%-13% of the import value because of the recent budget announcement on clinker levying a customs duty of Tk700 per metric ton.
Thus 12%-13% customs duty on the import value of key raw materials is considered disproportionate to the cement industry owners and its detrimental effect may put additional pressure on the consumer-general in the cement market and may lead to a slowdown in overall construction activity.
Alamgir Kabir pointed out: “We have been demanding for a long time that at the import stage, primarily AIT can be levied at a maximum of 0.50%, but it would not be appropriate to consider it as a final settlement. Therefore, wehave been applying to open up the opportunity to adjust the AIT.”
“Besides import stage, AIT has been levied as 2% in sales stage, it is being consideredas final settlement. Cement manufacturers have been demanding for a long time that a maximum of 0.50% may be levied at the primary level of sale stage, but it would not be appropriate to consider it as final settlement. Therefore, in this case too, we are requesting to have the opportunity to adjust AIT. Also, since Cement manufacturers have already paid AIT on raw materials at the import stage, paying AIT at the sale stage is equivalent of double taxation,” said Kabir.
He also mentioned that in the pre-budget discussion held on February 16, 2023, a request was made to the National Board of Revenue (NBR) to consider the matter and the authority verbally assured to reconsider this issue of AIT.
But unfortunately we have seen no reflection from the assurance of NBR in the budget of FY24.
Speaking of other difficulties he emphasized that the dollar crisis is making it more difficult to import cement raw materials, and that costs are also rising. As a result, issuing Letters of Credit (or LCs) presents significant challenges for the industrial owners in the cement business. Load shedding interferes with production. In addition, there is a shortage of gas, which prevents the necessary electricity from being generated. The cost of transporting cement is rising as a result of the rise in fuel oil prices. In addition, the absence of financial incentives for cement exports hurts the industry.
In this context, Md Alamgir Kabir appealed to the government and stated that, given the current circumstances, if the government designates this sector as a priority sector and issues the necessary directives to the pertinent government agencies, including banks, then this cement producers' distress will be somewhat alleviated and the cement industry sector of the country will be safeguarded.
In addition, the cement industry is a developing manufacturing sector that replaces imports. This industry is significantly advancing national growth, including infrastructural development, in order to address the nation's housing crisis.
The country's revenue is significantly influenced by the cement industry, which also makes a unique contribution to the economy.
Finally, with the aim of immediate solution, the cement producers are humbly requesting the government to take steps to reduce the customs duty on clinker, the main raw material of the cement industry, from the current rate of Tk700 per metric ton to Tk200 per metric ton.
We also urge to impose of AIT at a maximum of 0.50% at the import and sale stage and provide necessary directions of not to consider AIT as final settlement.
