Ahead of the Finance Minister placing the national budget for the 2020-21 fiscal in Parliament, the country’s steel manufacturers have placed an 8-point list of demands, including extension of bank loan repayment date by 6 months, for which they wouldn’t like to see the central bank degrade their status as borrowers.
Bangladesh Steel Manufacturers Association (BSMA), a leading business body, recently placed the proposals to the Prime Minister’s Office, Finance Ministry and National Board of Revenue, steel industry sources said.
The demands include increasing development spending compared to last year’s one, expediting the project implementation of all government agencies including Bangladesh Bridge Authority, Public Works Department (PWD) and Local Government Engineering Department (LGED), and releasing funds quickly for the existing development projects as a lot of the industry’s money is stuck in these projects as outstanding.
Steel is essential in most development projects, for example those earmarked under the Annual Development Programme that is included in each year’s budget. The vast majority of projects under the ADP include building infrastructure of some sort. The domestic steel industry has grown exponentially during the present government’s ‘development’-themed spell in office.
The BSMA proposed fast-tracking new development projects, issuing new rules and monitoring the implementation of existing social distancing and mask-wearing rules across the country instead of imposing any lockdown or holiday again, encourage real estate sector so that they can experience growth, and have National Board of Revenue refund years of taxes paid in advance and refundable to the steel industry.
The steel manufacturers said a huge amount that could easily have been utilised as working capital by the companies, remained stuck with the government in advance taxes as no refunds were processed last year, and previously only a few years’ refunds made their way back to the industry.
The BSMA appreciated the government for taking fiscal measures to mitigate economic downturn due to coronavirus impact and announcing the financial assistance package of Taka 1,00,000 crore.
It said the steel industry is one of the most prominent and strongest industries in the country, that is meeting 100 percent of national demand, which is more than 8 million metric tonnes a year through domestic manufacturing at a time of heightened development and contributing 2.2 percent to the GDP.
More than 3,00,000 people directly working in more than 200 companies belong to this industry and its total contribution to the national exchequer is around Tk 9,950 crore which is 2.84 percent of the national government revenue in 2018-19, it added.
The BSMA said production and sales of the steel industry has reduced to below 40 percent currently against the expectation as most of the government and non-government projects have almost shutdown or at least slowed down during the ‘general holiday’ from 26th March to 30th May 2020 across the country.
“Additionally, the private sector is also very slow. The most important fact is, investments made by the steel industry in recent times which will be around Tk 10,000 crores in anticipation of growth and demand of the country and our operating cost is same as before and we are regularly paying the wages of our workers.”
For that, the steel manufacturers said, the industry’s loans are increasing day by day which is around Taka 30,000 crore and a huge interest liability will remain even at reduced rates of interest which the government has allowed.
It will be impossible for the industry to pay back the loans in time on their current schedules due to very low levels of sales, said the BSMA leaders.