Duty-free imports of steel structures debilitating local manufacturers
The Steel Building Manufacturers Association says its thirty member companies, and around 200 others outside the association, are more than capable of catering to the Tk4,000 crore market
Highlights
- Many duty-free importers import steel products greater than demand and sell it on the open market
- Local manufacturers have to pay import duties on raw materials at a rate ranging from zero to 24 percent
- Commercial importers of finished goods are paying only 5 percent
- Local manufacturers requested the government allow them to participate in tenders
The Steel Building Manufacturers Association (SBMA) of Bangladesh has requested the government stop the duty-free import of prefabricated steel structures – mainly done by foreign groups working on large projects.
At a post-budget press briefing, chaired by the association's President Jowher Rizvi and presented by its General Secretary Md Rashed Khan, the SBMA said almost all the modern industrial buildings are now of pre-engineered steel structures.
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Twenty years ago, the local market for prefabricated steel structures was fully import-dependent.
Now, 30 SBMA member companies and around 200 others outside the association are more than capable of catering to the Tk4,000 crore market.
However, a large number of projects are importing the finished steel structures under a duty-free facility offered by the government – while capable local manufacturers are not even allowed to participate in tenders, the SMBA leaders complained.
Local manufacturers need to pay duties on imports of various raw materials that go up to as high as 24 percent on some items.
On many occasions, the importers with the duty-free facility bring in steel products more than the actual demand and sell the additional products on the open market, badly affecting the compliant local manufacturers.
This has to be stopped, and the government should also allow the local prefabricated steel building makers to participate in tenders to ensure a level-playing field, said the SBMA.
The association also demanded that the government reduce the customs duties on raw materials in the revised national budget for the fiscal year 2020-21.
SBMA General Secretary Md Rashed Khan said, "The existence of local steel manufacturers will face dire consequences if this situation prevails. So, we urge the government to withdraw duty-free import facilities on finished steel products and instead allow us to import steel raw materials with zero-duty for our businesses to flourish further," he said.
The SBMA general secretary further pointed out that the commercial importers pay five percent in customs duty (CD) on importing steel goods. In contrast, local steel manufacturers are paying 25 percent in CD while importing raw materials.
"The customs duty should be less for the manufacturers than the commercial importers in the greater interest of the country's industrialisation," he observed.
Wiping off the above-mentioned discriminatory system, they demanded that the customs duties be reduced on imported raw materials for steel building products.
Mentioning that the local steel manufacturers are capable of fulfilling the total steel demand of Bangladesh's market, Rizvi urged the government to allow the SBMA members to participate in the project tenders.
The SMBA president said the prefabricated steel building industry has suffered a significant financial loss due to the outbreak of Covid-19 as 95 percent of industrial raw materials are imported from China.
Mentioning that, from December till this month, about 30 prefabricated steel building companies under the SBMA, and about 200 others outside the association, have lost Tk10,000 crore, he urged to that funds – announced by Prime Minister Sheikh Hasina in the stimulus package to recover the pandemic-shattered economy – be disbursed rapidly.
Terming the prefabricated steel building industry an "industry of art," other leaders of the association said if the prefabricated steel building industry is saved, all industries in the country will be saved.
In recent years, prefabricated steel buildings have become popular as these establishments are affordable, earthquake resistant, and good for entrepreneurs as they help maintain global compliance standards at a low cost.
About 2 lakh people are directly and another 8 lakh are indirectly associated with the industry – while it is feared that more than one lakh workers and employees will lose their jobs due to the pandemic.
In recent years, the industry has witnessed double-digit growth annually.
