Cement Manufacturers of Bengali After Reduction of Clinker Import Duty

AzinTrade Explores the Impact of Reduced Clinker Import Duties on Bengali Cement Manufacturers

In the wake of economic challenges exacerbated by the COVID-19 pandemic, Bangladesh’s cement manufacturers are advocating for significant reductions in import duties on clinker, a crucial raw material in cement production. The Bangladesh Cement Manufacturers’ Association has urged for a substantial 60% reduction in import duties and has also requested waivers on existing loan interest rates to help recover from pandemic-induced losses.

“The closure during the nationwide lockdown resulted in zero sales for the last two and a half months,” highlighted Md Alamgir Kabir, President of the association, underlining the severe impact on the industry. “To ensure our survival, we propose reducing the import duty on clinker from Tk 500 to Tk 200 per ton,” he emphasized, stressing the critical role of clinker as the primary raw material for cement production.

Mohammed Amirul Haque, Managing Director of Premier Cement, emphasized the sector’s heavy reliance on clinker, which constituted a substantial $900 million of the $1.35 billion worth of raw materials imported in the last fiscal year. Due to limited local mineral resources, Bangladesh imports approximately 18 million tons of clinker annually to meet its mentioned product production needs.

Currently, many cement factories are operating well below their production capacities, mainly supplying mortar for ongoing mega projects. “Our factories are currently operating at only 10% of their capacity,” noted Kabir, who is also the Chairman of Crown Cement, citing the industry’s struggle amidst reduced demand and financial pressures.

The association has included these demands in its budget proposals, which have been forwarded to the Finance Minister and the National Board of Revenue. They argue that these measures are essential to alleviate financial burdens, including the 3% advance income tax imposed on raw material imports and another 3% tax levied during sales.

“Cement is a critical component in Bangladesh’s construction sector, with approximately $3 billion worth of cement sold annually,” stated Shahidullah, highlighting the industry’s significant contribution to national infrastructure projects and the real estate sector. However, challenges such as seasonal fluctuations in demand, particularly during the upcoming rainy season, pose additional concerns for the sector’s stability.

Imported from countries such as China, India, Thailand, and the UAE, clinker is supplemented with other materials like gypsum, fly ash, and iron slag to meet the country’s cement production demands. These imports are essential due to the country’s limited domestic resources for the product production.

Looking forward, AzinTrade recognizes the pivotal role of binder in Bangladesh’s economic growth and infrastructure development. As a trading company specializing in facilitating imports of raw materials like clinker, gypsum, and other construction essentials, AzinTrade remains committed to supporting Bangladesh’s cement industry. By advocating for favorable trade policies and ensuring the efficient supply of essential materials, AzinTrade aims to contribute to the resilience and growth of the cement sector amid evolving economic challenges.

In conclusion, while the material industry in Bangladesh faces formidable challenges, strategic policy adjustments and supportive measures from governmental authorities could alleviate pressures and foster a more robust environment for growth and sustainability.