In order to keep stable the price of cement – one of the major raw materials for construction, Bangladesh Cement Manufacturers Association (BCMA) demands the withdrawal of a non-adjustable 3 per cent income tax and 3 per cent tax at the supply stage in the upcoming budget.
It also demands an import duty of 5 per cent on clinker, another major raw material of the industry, instead of keeping the current Tk 500 payable per tonne.
According to industry insiders, all the raw materials for the cement sector in Bangladesh depend on foreign countries, so if the price of raw materials varies in the international market, its impact falls on the country.
Currently, about 35 local and foreign companies are producing cement in Bangladesh. The annual demand of cement in the country is about four crore tonnes against which there is a production capacity of about 8.4 crore tonnes.
The cement industry has been playing a significant role in the economic development of the country. More than Tk 5,000 crore a year is deposited in the government treasury in the form of customs taxes.
The sector has been exporting finished products for the past 15 years. The industry’s investment stands at around Tk 42,000 crore.
“We seek the National Board of Revenue’s (NBR) intervention in paying back investors Tk 1,000 crore which has remained stuck since being deposited as advance tax in the past couple of years,” said BCMA President Md Alamgir Kabir.
It is basically impossible to develop the infrastructure of a country, be it less developed or developing, without focusing on cement and steel, he said on 21th March (Sunday) while placing the industry’s proposals for budgetary changes for the next fiscal year.
“If we take a closer look at those who have made improvements, we will understand the importance,” he said.
For instance, China’s per capita cement consumption is 1,800 kilogrammes (kg), Malaysia 690 kg, Thailand 620 kg, Vietnam 518 kg, neighbouring India 325 kg, Sri Lanka 412 kg and Bangladesh 210 kg.
He said despite having immense potential, the sector received little importance.
Kabir alleged that most of the revenue collection was being done at the source to skip getting it done at the field level.
There is an unwritten rule to go for the source collection, without increasing scope for revenue collection, and this leaves scope for collection targets to be missed, he said.
Kabir said all raw materials of cement depend on imports, so the import duty, VAT and taxes were all deducted at the import stage.
“We have been repeatedly requesting that no government organisation fix a minimum profit for any private sector,” he said.
However, 3 per cent advance income tax has been made mandatory in this sector which is not adjustable or refundable, which is ultimately a liability. This is not only wrong but also unjust in a democratic system, he cited.
He said the import duty on clinkers was Tk 500 per tonne, which was 11 per cent of the total cost. But it should not be over 5 per cent, he said.
“We are not getting back the adjustable advance tax which was deposited in the last couple of years and the amount is around Tk 1,000, which is one of the reasons for a shortage of cash capital,” said the BCMA.
However, he said, as per an income tax ordinance of 1984, the depositors deserve an interest rate of 7.5 per cent against the money deposited.
“But we are not getting back our deposit from the NBR,” he said.
For example, the price of the raw materials has been increasing in international markets for the past two months, pointed out the BCMA president.
According to him, a major reason for this price increase is that transport or shipping fares have almost doubled, since last December.
The transport cost was $11 per tonne but currently it is $23 and so where this would lead to in the future cannot be predicted, he said.