Cement to be 10pc costlier

The price of cement will go up by Tk 42 per 50kg bag owing to some tax and VAT measures the finance minister has proposed on the imports of the raw materials used to produce the construction material, manufacturers said yesterday.

Until the current fiscal year, cement manufactures pay 5 percent advance income tax (AIT) to import raw materials and the tax is adjustable.

The AIT to be paid by the cement makers to import raw materials will be treated as the minimum tax from the next fiscal year of 2019-20, according to the proposal of the National Board of Revenue (NBR).

Manufacturers said the bid to consider 5 percent AIT as the minimum tax will put increased burden on them. They already pay source tax against the supply of cement locally.

The sum of the two minimum taxes – 5 percent at import stage and 3 percent during local supply -- will be a reason for losses for the cement industry, said the Bangladesh Cement Manufacturers Association (BCMA).

In addition, manufacturers will have to pay 5 percent advance tax (AT) while importing raw materials and other required ingredients. This will increase the operational cost and thus the prices of cement, according to the BCMA.

“Under these circumstances, the production cost of cement will increase by 10 percent which will have to be borne by consumers,” said BCMA President Mohammed Alamgir Kabir.

He spoke at a press conference organised by the BCMA at its office in Dhaka to share its reaction on the proposed tax measures.

Kabir said the prices of a 50kg cement bag may increase to Tk 460 from Tk 420 on average.

The impact of the price hike of cement will affect the housing sector and the government’s infrastructure projects.

“Ultimately, the industrial sector will be the loser,” Kabir said.

The association demanded making the 5 percent AIT on imports and the 3 percent source tax on local supply adjustable and withdrawal of 5 percent AT on imports. 

Kabir, also the chairman of GPH Ispat Ltd, said manufactures don’t want to increase the price of cement as the sector has been clocking 10 to 15 percent annual growth for the last 10 years, on the back of the country’s faster economic growth and the implementation of a number of mega projects.

He said if the tax measures remain unchanged, the growth of the sector will face big challenges and all development activities will slow down.

The market size of the cement sector is Tk 13,000 crore and the annual demand is 3.5 crore tonnes.

At present, 42 cement factories are active, with their combined installed manufacturing capacity standing at 5.5 crore tonnes. The investment in the sector is around Tk 30,000 crore.

Md Shahidullah, managing director of Metrocem Group, and Md Abdur Razzaque, general manager of Seven Rings Cement, were present at the briefing.