15 September 2013

Pakistani steel manufacturers demand level-playing field:

The News reported that members of Pakistan Steel Manufacturers Association have demanded the government to withdraw tax exemptions from ship-breaking industry to create level-playing field for all players in the industry.

Taking to journalists, Mr Abbas Akberali of Amreli Steels Limited and Mr Khalid Khan of Abbas Steel Group, said that exemptions of a few taxes and duties to the ship breaking industry and recent increase in the electricity tariff by PKR 5,000 per tonne for the association’s members, have given big advantages to the ship breaking industry over members.

Mr Akberali said that “Economic advantages to ship-breakers make their products cheaper by PKR 12,000 to PKR 16,000 per tonne than the products made by other players in the industry.”

He said that there is an agreement between the ship breakers and other players in the steel industry that the difference in price of ship breakers and others’ products will not be greater than PKR 1,200 per tonne.

He said that “The huge difference of PKR 12,000 to PKR 16,000 per tonne is constantly pushing the steel manufacturers on the back foot and if the situation persists, time is not far that they will have to close their units down to avoid losses. In its budget proposals to the Federal Board of Revenue, the steel melting sector had requested imposition of a five% customs duty and PKR 3,500 per tonne specific duty on ships imported for dismantling in the country to give a level playing field and equal competition to all sectors.”

Moreover, the government should collect sales tax on 100% weight of ships rather than on 70.5% weight as of today.

The officials said that the practice of not charging sales tax on 29.5% of a scrap ship has been going on for almost five to six years now and has caused losses worth billions of rupees to the national exchequer.

They said that the unfair and unjustified tax and duty exemptions to the ship breaking industry is discouraging the steel manufacturers who are paying all the duties and taxes.

If the government wants to achieve sustainable growth in the steel sector, it must discourage such exemptions and try to provide a level-playing field to all the players of steel industry.

Mr Akberali said that “We are utilizing around 50 to 55% capacity of installed production, at present, the absence of level playing field to the players other than ship-breakers may result in closure of steel manufacturing units in Pakistan.”

He said that “If such units are closed, thousands of workers will lose their jobs. Besides, the situation will also result in no collection of taxes from the industry.”

Source: steel guru. 11 September 2013

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