Bangladesh Steel Manufacturers Association (BSMA) has appealed for an economic stimulus package as the steel industry continues to be hit by the COVID-19 pandemic. In March-April, the industry faced a net loss of BDT30,000mn as sales remained insignificant. End-user demand is still paused with infrastructure development and construction projects being stalled.
Manufacturers, however, have to bear expenses including staff salaries.
The industry has thus sought a package of the same amount of their estimated losses.
The association believes the situation is likely to persist till December with the losses accumulating to BDT150,000mn. Industry participants state it could take two years at the minimum to tide over these losses in absence of any package.
Imports of steel raw material, especially scrap, remains disrupted with lockdowns in exporting countries like the US, Canada, the UK and Australia.
BSMA also seeks low-interest loans, mainly short term for small scale businesses against LC’s. The association feels banks needs to extend the tenure of payment for letters of credit by six months without prior permission from the central bank.
Request for changes in the taxation
BSMA has asked to lower the customs duty to BDT500/mt from the existing BDT1,500/mt for imports of ferrous scrap. To support the domestic steel industry, the body has asked for levying a 15pc supplementary duty on finished MS rod or rebar import.
A reduction in corporate tax to 10pc from 35pc and withdrawal of 5pc advance income tax during imports for the next fiscal year could also help the industry.
“Major steel mills are in a wait-and-see mode and are hesitating to book ferrous scrap cargoes from the import market. Many steel mills are also yet to resume production, as they are unable to cope up with the COVID-19 impact” said a steel maker.
Bangladesh steel industry is worth BDT500,000mn with around 40 active steel makers. The country’s annual steelmaking capacity is around 9mn mt. Abul Khair Steel, GPH Steel, BSRM and KSRM are some large-scale steel manufacturers.