Cement sector will remain normal without raw material complexities

After the outbreak of the novel coronavirus in the country, 90% of cement production was stopped in April-May during general holidays. At present, production has resumed up to 80-90%. Many companies are also experiencing growth due to big government projects.

However, the cement sector is in crisis as demand declined due to the pandemic as well as tax complexities. Some factories are at risk of closure as they faced losses and consistently failed to meet operating costs as well.

Although the government's mega projects and the housing sector helped the cement sector turn around, it is in crisis due to the imposition of a 3% advance income tax on cement in the budget and tariffs on clinker imports being higher than that in the international market.

At present, the import of clinker – the main raw material for cement – is subject to a tariff of Tk500 per tonne. Clinker is currently imported at $38-40 per tonne, with an import duty of Tk500 exceeding 16%.

But more than 5% tariff on intermediate raw materials is, in no way, acceptable. This does not happen in any other industry.

The pandemic has caused this industry to incur a loss of about Tk5,000 crore. Many companies are in trouble due to production capacity being more than double the demand. In 2021, it will be the most important thing to find new markets and resolve the complexities of raw material imports.

Mohammed Amirul Haque, managing director and CEO of Premier Cement Mills Limited.