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Cement industry grapples with crises

Published : 13 Dec 2022 09:26 PM | Updated : 14 Dec 2022 05:43 PM

The country’s cement industriesare currently facing difficulty dueto a variety of issues, including sudden imposition of supplementaryduty on raw materials,unadjustable Advance IncomeTax (AIT), fuel shortage, high transportation costs, and increasing currency value. 

Bangladesh Cement Manufacturers Association (BCMA) president Md Alamgir Kabir gave a current picture of the country's cement sector through a press conference held at a city hotel on Tuesday. 

Only proper government steps will solve these issues in the cement sector. Otherwise, it may have an adverse effect on the price of cement, which may hamper the infrastructural development of the country, according to cement industry owners.

MdAlamgirKabir said that cement production in the country is carried out by 35 local and foreign enterprises, with an annual effective production capacity of over 79 million tonnes compared to an annual demand of roughly 39 million tonnes. Due to a production capacity which is almost two times higher than demand, there is big competition in the market. Therefore, cement is being sold at the lowest minimal price in order to survive in the cutthroat market. The cement manufacturing companies are experiencing financial hardship.

The main raw materials for cement production are imported from abroad. Limestone, a main raw material for the cement industry, has been levied a one-time supplementary duty of 30 percent and an additional AIT of 2 percent along with existing AIT of 3 percent. Besides, there is already 15 percent value added tax (VAT) and 3 percent advance tax on import of limestone. The sector is suffering greatly due to the sudden imposition of additional duty on limestone. 

MdAlamgirKabir said, “As a result of this additional taxation, limestone is now being released or assessed by paying around 67 percent duty instead of around 27 percent on the import value in the recent past.”

He said that clinker,slag, limestone, fly ash, and gypsum are the primary raw ingredients used in the manufacture of cement. These five different kinds of raw materials are imported from abroad. As per BSTI and European standards, a maximum of 35 percent limestone can be used in the manufacturing of cement. Comparing to the import costs of other raw materials, limestone bears the lowest import costs. This increased duty on limestone will discourage cement manufacturers from importing limestone although limestone is a raw material that helps cement manufacturers conserves foreign currency. As a result, the current dollar situation will be put under much more strain, which is by no means ideal.

The BCMA president stated at the press conference that besides AIT at import stage, a 2 percent AIT is collected at the point of sale. That is, even if a cement manufacturing company incurs a loss, it has to pay this advance income tax as a final tax liability which is not acceptable under any circumstances.The cement producers have previously brought the subject of the cement industry's misery as a result of advance income tax many times before the National Board of Revenue. But it is disappointing that the appropriate government departments are not giving the issue any attention that it deserves, which is hurting the nation's developing industrial sector, the BCMA president laments.

“We hope the appropriate government authorities will take the subject into consideration and levy a maximum of 0.50 percent of advance income tax both at the import and sales stages and exempt them from the ultimate tax payment,” he said.

The price of cement is rising as a result of the difficulty in importing raw materials due to the dollar crisis. As a result, the industry owners of the cement sector are currently facing huge hurdles even while opening new LCs. Production is disrupted due to loadshedding. At the same time, required amount of electricity cannot be generated due to gas shortage. The cost of cement transportation locally is rising following the rise in gasoline prices. Additionally, the business is suffering from a lack of financial incentives for exports of cement.

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