Cement manufacturers want cuts in import duty on clinker

The cement manufacturers have sought a 60 per cent cut in import duty on clinker and waiver on existing loan interest, to recover from the losses they suffered since the COVID-19 outbreak.

"We had zero sales during the countrywide closure in the last two and a half months," said Md Alamgir Kabir, president of Bangladesh Cement Manufacturers' Association (BCMA).

"So for our survival we need the import duty on clinker, the sector's major raw material, to be brought down to Tk 200 a tonne from the existing Tk 500."

The sector is heavily dependent on clinker, said Mohammed Amirul Haque, managing director of Premier Cement.

"Clinker accounted for $900 million of the $1.35 billion worth of raw materials that the manufacturers imported last fiscal year. Due to a lack of mineral resources, local cement manufacturers bring in around 18 million tonnes of clinker every year."

The sector counted a loss of around Tk 600 crore from March 26 to May 30. Factories opened on a limited scale on June 1 as the demand was close to zero," said Md Shahidullah, first vice-president of BCMA.

Most factories are now using only 10 per cent production capacity to supply cement to some of the ongoing mega projects, said Shahidullah, also the managing director of Metrocem Cement.

"The rest 90 per cent capacity has remained unutilised, but still the cement makers had to pay staff salaries, including Eid bonus, and set aside money for the loans they have."

The cement makers pay 3 per cent advance income tax for importing raw materials and 3 per cent tax during sales, said Kabir, also the chairman of Crown Cement.

"To ease our burden, we urgently need waiver on our existing loan interest, as revenues have dried up to a great extent."

The association made the demand in its budget proposals, which have already been forwarded to the finance minister and the National Board of Revenue.

Annually $3 billion or Tk 25,500 crore worth of cement is sold, of which 45 per cent goes to government projects, 30 per cent to real estate companies and the rest to individual consumers, Shahidullah said.

"Cement supply has begun, but the sales are nominal," he added.

The rainy season, when demand remains poor, is knocking at the door, Kabir said.

Considering the poor economic climate, cement manufacturers would be willing to sell their products at the manufacturing cost, he added.

"Despite that, we can barely offload the stocks due to a thin presence of buyers."

The industry grew at over 15 per cent on an average a year in the past decade. This tremendous growth rate is enough to draw foreign raw material suppliers, market players said.

The demand for raw materials is increasing in line with the expansion of the manufacturing capacity, Haque said.

"About 80 per cent of the clinkers used for cement production in Bangladesh are imported."

The industry would not need to import fly ash after five years as the component, a byproduct of coal-based power plants, would be produced in the country.

The local production of fly ash would save $130 million annually, he said.

Cement manufacturers import clinker, gypsum, fly ash, and iron slag from China, Hong Kong, India, Indonesia, Thailand, Japan, Korea, Malaysia, Oman, and the UAE.

There are around 125 cement manufacturing companies in Bangladesh, out of which 37 are in operation and they have an investment of around Tk 30,000 crore. The total production capacity of the cement mills was 58 million tonnes in 2018.