Proposed tax to put cement industry on edge: BCMA

Amid many hurdles, including fuel shortages, high transportation costs, the dollar crisis, and raw material price hikes, the additional tax burden will put the cement industry in a deep crisis, Bangladesh Cement Manufacturers Association (BCMA) President Md Alamgir Kabir has said.

Kabir, also the vice-chairman of Crown Cement, made the remark at a press conference at a hotel in the capital on Monday.

“Our industry is one of the emerging sectors of Bangladesh, but we are now going through a tough time due to a variety of issues,” he said.

“We have been demanding for a long time the customs duty (CD) on clinker be reduced from Tk 500 per metric tonne to Tk 200. But in the new budget, it has been increased from Tk 500 to Tk 700 per metric tonne. Cement manufacturers are very disappointed,” Kabir said.

He also said the CD imposed on key raw materials of an industry is generally 5 per cent of the import value, but now the CD on clinker has stood at around 12-13 per cent of the import value because of the proposals made in the FY24 budget.

As a result, its detrimental effects may put additional pressure on consumers, which may lead to a slowdown in overall construction activities, the BCMA leader explained.

At the import stage, the current advance income tax (AIT) is 2 per cent for clinker, 3 per cent for slag, 3 per cent for fly ash, 5 per cent for limestone, and 5 per cent for gypsum, he said.

“We have been demanding for a long time that at the import stage, AIT can primarily be levied at a maximum of 0.5 per cent, but it would not be appropriate to consider it the final settlement. We have been applying for opportunities to adjust the AIT,” said Kabir.

“Meanwhile, at the sales stage, a 2 per cent AIT has been levied and is being considered the final settlement. Cement manufacturers have been demanding for a long time that a maximum of 0.50 per cent may be levied at the primary level of the sales stage, but it would not be appropriate to consider it the final settlement.

“Therefore, in this case too, we are requesting to have the opportunity to adjust AIT. Also, since we have already paid AIT on raw materials at the import stage, paying AIT at the sales stage is the equivalent to double taxation,” he explained.

In the pre-budget discussion held on February 16 this year, a request was made to the National Board of Revenue (NBR) to consider the matter and they verbally assured of doing so, he also said. “But unfortunately we have seen no reflections of the assurance in the budget for FY24.”

Gas, power, dollar crises

The BCMA president said the dollar crisis is making it more difficult to import cement raw materials and costs are also rising. As a result, having letters of credit (LCs) issued is a significant challenge for cement business owners.

“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,” Kabir said.

In addition, the absence of financial incentives for cement exports hurts the industry, he said.

“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, cement producers’ distress will be somewhat alleviated and the industry will be safeguarded.”