Different views: PSMA hails; FPCCI fails 15% regulatory duty

Govt has imposed duty to protect local steel industry.

KARACHI: The Pakistan Steel Melters Association (PSMA) welcomed the 15% regulatory duty on all steel billets, bars and wire rods, a move that protects the local industry and is meant to garner investment in the sector.

The decision was taken at a time when imported steel is cheaper due to reasons due to subsidies placed by exporting countries.

According to a statement issued by the PSMA, the difference in cost between imported and locally-manufactured products had reached between Rs9,000-14,000 per ton. According to a PSMA member, the government has acted in the best interest of the local steel sector.



In the past 12 months, over 175,000 tons of only steel billets, bars and wire rods have been imported in the country under various Pakistan Customs Tariff codes.

“When imported products eat away market share from local manufacturers, we are forced to reduce output, lay off workers, and in some cases close down altogether,” said a manufacturer whose plant has been closed for the past few months.

As the government attempts to create a level playing field, the country should witness growth in investment, employment and revenue collection, added the statement.

The flip side

Meanwhile, the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Mian Muhammad Adrees opposed the regulatory duty, saying the move adds to their already-high number of advantages.

In a statement, the FPCCI chief said melters and ship breakers are already enjoying high subsidies as their sales tax is under the slab of 10%. They are also enjoying the benefits of reduction in international prices, which amount to 25% of shredded steel scrap.

The regulatory duty, Adrees said, will further strengthen their position on creating a monopoly over the supply of raw material to steel re-rollers.

He said local steel melters provide raw material to steel re-rollers at high prices, forcing their hand at importing the cheaper product.

Published in The Express Tribune, January 13^th,  2015.

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