Steel producers seek duty relief on scrap import

Demand reduction in minimum turnover tax for industry, retailers<br /> to 0.25%

KARACHI: Following the outbreak of coronavirus in the country, Pakistan Association of Large Steel Producers (PALSP) has requested relief measures from the government, citing the global economy seems to be heading towards recession.

"It is an extraordinary situation, which calls for extraordinary measures," remarked PALSP Secretary-General Syed Wajid Bukhari in a statement on Friday. "Governments and central banks all over the world have introduced fiscal and monetary measures to counter the disruption caused by the pandemic."

With the Pakistani economy already struggling to leap forward, the coronavirus outbreak is expected to cause a cash crunch and drastic reduction in demand, which may leave many businesses bankrupt and workers unemployed.

To avoid a complete meltdown of the economy, the interest rate must be slashed to 5% for the next 12 months on an immediate basis as an extraordinary measure, suggested Bukhari while pointing out that the US had recently reduced its policy rate to near 0%.

He lamented that Pakistan had one of the highest interest rates in the world.



"There are companies which have paid more than Rs1 billion in interest in the last one year alone," he pointed out. "Due to the economic slowdown in the country, the cost of raw material has risen up to 35%, which the industry cannot pass on to customers because of their lower purchasing power."

He demanded that all principal loan repayments in the long and short term should be deferred for the next 12 months while the industry could try to pay mark-up at a reduced rate of 5%.

Bukhari stressed that the minimum turnover tax for the industry and retailers should be reduced to 0.25% with immediate effect. He urged the government to reduce the regulatory duty and other import duties on the meltable steel scrap to 0% as it was a primary raw material for the steel industry.

He also requested the government to immediately issue orders for adjusting the full sales tax (input tax) for the documented steel industry players on their opening inventory of July 1, 2019.

"Timely and targeted measures are the need of the hour to support the businesses disrupted by COVID-19," he said. "Government of Pakistan must act now to save the economy from de-industrialisation and loss of jobs."

Endorsing his views, JS Global analyst Arsalan Ahmed said putting off loan repayments would definitely help the industries during current difficult times.

He pointed out that if the reduction in interest rate was not possible for the government, then it could allow the industries to defer interest payments for a few months.

Published in The Express Tribune, March 21^st, 2020.

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