Steel industry seeks relief to prevent many units from closing down

ISLAMABAD: The steel industry has asked the PTI led-government to remove regulatory and custom duty on primary raw material, steel scrap and continuation of special procedures for collection of sales tax from this sector in the upcoming budget 2019-20.

According to letter written by steel industry to Adviser to PM on Commerce Abdul Razzak Dawood stating that key intervention required from the government to prevent collapse in steel industry in months ahead as the economy was slowing down so special incentives required to jump start the sluggish economic activities.

This letter is an appeal to take key policy measures to give the steel industry some relief to prevent many units from closing down. These key measures included removal of regulatory and customs duties on our primary raw material, steel scrap, imported under PCT

Codes [7204.3000, 7204.4100 and 7204.4990]; Sales tax rate under Special Procedures to be kept as status quo but mechanism for collection to be amended as communicated to FBR; and regulatory duties and customs duties on intermediate and finished goods under the following PCT Codes to be kept as status quo: [72.07, 72.13, 72.14, 72.15, 72.24, 72.28].

The letter further stated that Pakistan’s long steel industry has nosedived over the past 6 months due to a rise in cost of doing business coupled with a sudden deceleration of demand. The PKR devaluation, rise in energy prices and interest rate hikes have put margins under great pressure for the industry.

Deterioration in demand is due to slow-down of infrastructure projects, cuts in development spending, delay in PM’s 5 million housing project, smuggling from Iran border and general slowdown of housing projects across the country. These factors have left the industry in dire straits with many units declaring bankruptcy and others cutting down utilisation drastically.