Thursday, 15 January 2015

Steel industry: stakeholders say 15 percent RD fares competition

Despite the imposition of 15 percent regulatory duty (RD), the heavily-subsidised imported products stand cheaper by Rs 3,000 to Rs 5,000 than the locally-manufactured products, said the industry stakeholders Wednesday. The RD, however, has been welcomed by the steel melters, ship breakers, wire rod manufacturers and large scale re-rollers saying the incentive would make the industry competitive.

"We salute the government for providing a win-win situation for everybody where importers can continue importing steel products without wiping out local industry and the government can also mop up extra revenues," Vice Chairman of PSMA Khalid Khan told a group of journalists at a local hotel here.

He said the steel melters, ship breakers and large-scale re-rollers, representing over 85 percent of the sector's production capacity, approached the Federal Board of Revenue and the ministries of finance, commerce and industries and production because the difference between locally-manufactured and imported bars and billets was ranging between Rs 10,000 and Rs 15,000.

About objections raised by some re-rollers, Khan, also the member of PSRMA, said: "We, despite being member of PSRMA, were not consulted before such objections were raised in the media. No meeting was called either and only a few small re-rollers are against the imposition of RD. We fully support the imposition of RD." He also questioned the statement of FPCCI saying the statement was not issued before hearing the ship-breakers and steel melters, who represent a majority of the steel industry.

Hadi Akberali, a director at Amreli Steels, said there was ample capacity in the country to cater for local demand. "Before imposition of RD on steel products a lot of mills were only utilising at 40-60 percent capacity because imported products were being dumped in the market. We urge consumers to approach us for steel products as there is ample capacity in the country and the regulatory duty would foster an investment-friendly environment that would bring more capacity into the country," he said.

Citing a news article reported recently, Hadi said the subsidies accounted for four-fifths of the profits reported by Chinese Steel companies in the first half of 2014. "How can we compete with manufacturers in exporting countries when their government provides export rebates of up to 13 percent in addition to electricity subsidies and tax breaks? It is not a matter of making our industrial units more efficient because we have world class production facilities - it is a matter of an unfair competitive environment," said Hussain Agha, executive director at Agha Steel Industries.

The PSMA officials said the regulatory duty would also help the state-run Pakistan Steel Mills get back on its feet through being able to sell its products to consumers at competitive prices against the imported goods. "Imported goods would continue to come in but they would just be more competitive priced than before and will provide a level playing field,"
Copyright Business Recorder, 2015

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