Businesses want balanced duty structures on CI sheet, cement

CHITTAGONG, Apr 12: Highly imbalanced duty structures in both import and local manufacturing of CI sheet and cement have severely hampered healthy growth of the two sectors.
This has led to abnormal price hike of the rural and urban housing essentials in the local market in spite of their low prices in the international market.
Due to the unusual duty structure, many medium-range industries based on the import of cold rolled coil have shut down over the last decade.
Those industries which have closed down in Chittagong are MEB Steel, Zaved Steel, AB Engineering, Vanguard Steel, Zubaida Steel (now Ehsan Group engaged in the real estate sector), Mostafa Steel, Bangla Union and Karim Steel.
NGS Steel is still in the CI sheet market but is running under serious financial difficulties.
Retailers in the city's Asadganj Khuilya Meah Market and Asadganj Road, where over 500 shops are located, said prices of all types of corrugated iron (CI) sheets have soared three times in less than a decade. CI sheets are selling at Tk 1,08,000 to Tk 1,11,000 a ton which was Tk 35,000 in 2003-04.
 "Now it is the high season of CI sheet sale because tin-roofed houses are built and repaired in this season. But present sales are too low. Barely a few tons of CI sheets are being sold in this largest market in the port city," said Md Sekandar Hossain, owner Sekandar & Brothers.
 "Major manufacturers have failed to maintain their quality as there is no monitoring by the government agencies to ensure quality of CI sheets in the market," he told this correspondent in his office last Thursday.
Abdul Hamid of HMB Enterprise in the same market said thin CI sheets of 282 pieces are selling at Tk 34,000 against that of Tk 31,000 in March and Tk 27,000 in January.
The rural common people have to bear the brunt of imbalanced duty and other charges imposed by the government authorities that have forced many local factories to close and a few giant factories to rule the roost, they opined.
 "A section of them even try to manipulate the market and cause distortions in order to reap outrageous profits. Along with the middlemen they control both the supply line and stocks to their own advantage," said a leader at Khatunganj Trade and Industries Association.
 "The hike in import tariff of cold rolled (CR) coil, the main raw material for producing CI sheet/galvanised iron sheet, has pushed up its price in the domestic market. Traders have also expressed the apprehension in this regard. But the Customs authority have ruled out any significant impact on the retail prices," he said declining to be named.
The global market of hot rolled (HR) coil, another raw material for CI sheet, is now priced between US$550 and $600 per ton which was in the range of $1200 to $1400 per ton during the global recession four years back.
Chittagong Custom House sources said last week that FOB price of HR Coil from Russia was $505 to $510 per ton and the FOB price of CR Coil was $590 to $600 per ton. The FOB price of HR Coil from China is $515 to 520 and FOB price of CR Coil is $595 to $605 per ton.
So the tariff value of CR Coil is already up in the global market by Tk 7500 per ton. On the other hand, US dollar is selling at Tk 78 but the greenback was Tk 85 during the global recession three years ago, sources said.
Import duty on CR Coil and HR Coil should be the same because both are semi-finished products, traders said.
 "Because of anomaly in duty structure the people of the country are not getting any advantage of reduction or fall in price of raw materials of CGI (corrugated galvanized iron) sheets in the global market as well as in the exchange rate because the price was fixed up in 2008 when there was recession," he said suggesting rectification and balancing in the duty structure in the upcoming budget.
Considering the present global market, price the cost of CI sheet in the local market should be in the range of Tk 65,000 to Tk 70,000 per ton, while it is selling at an alarmingly high price of Tk 1,11,000 per ton, the trade organisation leader said.
As regards cement industry the reality is far worse, businesses said.
The country's real estate industry as well as public infrastructure sector has also suffered a lot over the years as cement buyers are paying Tk 400 to Tk 450 more for one bag of cement while the import cost will be below Tk 200, they opined.
Import duty on clinker, raw material of cement, is flat Tk 500 per ton plus 15 per cent VAT (value added tax) while duties and other changes are on cement import are 94 per cent.
There are some taxes imposed on it, such as 20 per cent Supplementary Duty, 5.0 per cent Regulatory Duty and 4.0 per cent Advance Trade Vat (ATV), which have pushed up the price exorbitantly and the real estate sector and government development activities are being tremendously hampered, sufferers said. The customs duty should also be reduced to 10 per cent from the existing 25 per cent, developers opined.
 "The construction sector has remained stagnant for over a year as the government has imposed illogical duty structure. The government's development sector has been affected by this," he said.