Now steelmakers seek government support to stay afloat 

Steelmakers are counting huge losses every day as they are bearing most of the overhead costs despite a significant drop in sales and supply chain disruption. 

The business scene is unlikely to go back to its old self within this year when the shutdown ends.

So the country's steelmakers have asked for tax rationalisation, favourable financing and utility bill deferment.  

In an online press conference on Monday, the Bangladesh Steel Manufacturers Association (BSMA) Chairman Manwar Hossain said, "During March-April alone estimated loss of the industry was Tk3,000 crore. The loss is likely to reach Tk15,000 crore within December this year." 

"The adverse effects of the crisis will take at least two years to disappear but the steelmakers will have to bear its financial consequences for the next five to eight years.

"No steel company will be able to make a profit this year. And it is high time the government helped the industry stay afloat." 

The steelmakers, who have Tk50,000 crore investment and 3 lakh employees, requested the government not to force any of them to pay electricity and gas bills until October this year.

If the government defers the bills for March-July without any penalty, the companies will begin paying it from October, they said. And they will need six monthly instalments to clear the unpaid bills. 

BSMA also requested to allocate Tk3,000 crore of concessional loans for its members from the prime minister-declared Tk30,000 crore fund for large industries. 

They also asked for non-funded banking support in the form of an extra letter of credit limit that will enable them to import raw material for four months. 

The steelmakers, whose volumetric business needs investment and is labour-intensive, demanded cancellation of all sorts of advance taxes and immediate refund or adjustment of accumulated advance income taxes. 

Their request includes no extra interest or penalty in the next one year, strict implementation of 9 percent interest cap on loans, and loan rescheduling facility for the struggling steelmakers for a decade, with a six month's grace period. 

As "high tax and duty might destroy any industry during the crisis," steelmakers demanded rationalisation of taxes, duties and value added tax (VAT). 

Their proposals include lowering import duty of melting scrap to Tk500 per tonne from the existing Tk1,500, cutting VAT on making billets from imported scraps and MS (mild-steel) rod from billets to the previous level of Tk450 per tonne from the existing Tk1,000, and VAT on manufacturing MS rod from melting scraps to the previous level of Tk900 per tonne from the existing Tk2,000. 

BSMA requested to cancel the 5 percent advance tax on imports of its raw materials, alongside stopping VAT at source. It also demanded Tk200 per tonne VAT for steel industry retailers, which is Tk500 now. 

When the pandemic retreats, the global economic slowdown would increase the tendency of dumping MS rod. So the government should impose an extra 15 percent supplementary duty on the imports of MS rods. 

As the industry might face a raw material crisis, BSMA requested the government to cut VAT on scrap or ship scraps to Tk300 per tonne from the existing Tk1,000. 

Also, it requested 10 percent corporate tax in the next fiscal year, which is 25 percent for the publicly listed companies and 35 percent for others. 

In cases of deemed export, the local companies face revenue board's complexities, while the projects are allowed to import MS rod without paying any duty. 

To support local manufacturers now, the government should ban duty-free imports and help local companies thrive in deemed export too, said the steelmakers' association.

Its members are catering over 70 percent of annual demand for construction rods. They melt iron in different stages in their plants and add other raw materials to make reliable products. 

Re-rolling mills that shape rods from larger metals meet the rest of the demand. They mainly cater to low budget constructions.