The cement manufacturing sector is one of the industrial segments most affected by the novel coronavirus pandemic. Around 90 percent of cement production has stopped since the government-declared shutdown was announced. However, operation costs have not stopped as the industries have been bearing salary payments and other daily expenses.
Additionally, the Letters of Credit (LCs) opened so far have become a burden as cement production is totally dependent on the import of raw material. However, nearly 90 percent of construction, including of mega-projects and small-scale work, is closed. Noone can predict when the situation will return to normal.
Interest on bank loans for working capital and capital machinery is increasing. Further, imported raw materials must be unloaded within four days from ships reaching the port, and in default, the importers are charged with high late fees.
High late fees are also levied on the seabound vessels as per international maritime law. The charge is not paid in taka, but rather, in foreign currencies. All of this has created a complex situation where nobody can do anything and no one knows the solution.
Some people may argue that the cement sector is among the industries that can avail government stimulus packages.
The sector can; but availing the low-cost loans depends on priority — manufacturers who require it will avail it, but taking the facility will increase their loan burden.
My opinion is that banks will never be able to provide loans this large, because the banks are losing their capacity on deposits and approaching a liquidity crisis.
We are sensing that our gross domestic product and revenue collection will fall, prompting a huge revenue deficit.
Revenue collection at productions and import have been hit hard. Plus, this source will be disrupted as remittances will see a sharp reduction. Meanwhile, we all understand the losses of the garment industries due to the pandemic.
Against the backdrop of the crisis, all public and private construction will either be postponed or extended. This slowdown will reduce the use of cement and its production as well.
Cement is an indicator of development. Per capita cement consumption indicates a country's pace towards development.
Apart from this, several lakhs of construction workers, employees and officials are directly or indirectly dependent on the cement manufacturing sector.
Many people may lose their jobs if the cement factories do not run. Additionally, the government can lose a huge amount of revenue from this construction sector.
Therefore, I appeal to the government to protect the cement manufacturing sector. I urge the government to reconsider import duties and the advance tax of raw material imports.
On top of this, salary payments of this sector's staffers could be easier if the government considers paying factory utility bills and other duties, in installments, from July to December.
Mohammed Alamgir Kabir is the president of Bangladesh Cement Manufacturers Association