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February 8, 2018

Steel melters oppose duty, tax exemptions to Chinese company

Business

 
February 8, 2018

KARACHI: Pakistan Steel Melters Association (PSMA) has rejected duty and tax concession / exemption granted by the government to China State Construction Engineering Corporation Limited, a statement said on Wednesday.

This taxes and duty exemption to Chinese company will cost national exchequer approximately Rs11 billion, it added.

The association said through SRO 47(I) 2018, China State Construction Engineering Corporation Limited, which is working on Motorway Sukkur to Multan section, has been allowed duty-free import of construction materials and machinery in Pakistan.

To record it reservations at the highest level, Pakistan Steel Melters Association has drawn attention of Prime Minister Shahid Khaqan Abbasi towards the issue through a letter, requesting him to withdraw the disputed exemptions allowed to a foreign company on the expenses of local steel sector, the statement said.

In 2017, Pakistan Steel Melting Industry was coined as the fastest growing steel industry in the world, as per LSM (Large-Scale-Manufacturing) data published by the SBP (State Bank of Pakistan), noting that billet/ingot production has grown 62 percent 4MFY18 year-on-year.

Hussain Agha, senior vice chairman of Pakistan Steel Melters Association, said: “The steel industry of Pakistan is gearing up for a massive $300 million capacity expansion within the next 24 months, which would yield multifold growth in the revenue collection to the national exchequer.”

“The Chinese are our brothers in progress and we warmly welcome China-Pakistan Economic Corridor (CPEC); however, we must ensure that it is done on a fair and mutually benefitting basis.”

Tremendous jobs are at stake, if the government gives anti-localisation incentives to special companies, Agha added.

Steel industry generates the largest revenue among the growing sectors of Pakistan and also aims at fulfilling the upcoming demand of CPEC through providing high grade manufactured steel.

Agha, who is also the executive director of Agha Steel Industries, said, “First phase of Agha Steels project is expected to come online in 2018, which will directly save the government at least $180 million/annum in direct import substitution and will further generate additional taxes for our government.”

New steel projects expected to come online within the next 12 months will save the national exchequer billions of dollars by import substitution, he said.

Pakistan Steel Melters Association strongly objects any policies that could hamper growth in Pakistan and SRO 47(I) 2018 will dampen future investments alongside with already gifting Rs11 billion loss to the government in revenue collection.

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