Looking for survival: Local steel industry pleased with protection, looks to construct growth
Hails regulatory duty on imports, says it will foster investment.
As part of the policy the government is introducing a 15% regulatory duty on steel billets, bars and wire rods – a move that is meant to protect local industry. PHOTO: AFP
KARACHI:
Welcoming the latest policy, leading steel melters and re-rollers on Wednesday defended the imposition of 15% Regulatory Duty (RD) on steel imports, citing that the heavy imports were adversely affecting the local industry.
The government’s decision has come as a response to lengthy lobbying on part of the steel industry, which was trying to secure its survival in the face of international competition. Steel melters, ship breakers and large scale re-rollers – that represent over 85% of the sector’s production capacity – approached the Federal Board of Revenue (FBR), and relevant ministries on the rising difference between locally manufactured and imported products that had swelled to Rs10,000-15,000 per ton.
As part of the policy the government is introducing a 15% regulatory duty on steel billets, bars and wire rods – a move that is meant to protect local industry. After the imposition of the regulatory duty, imported steel products are still Rs3,000-Rs5,000 cheaper than locally manufactured products, according to the industry experts.
The makers of different steel products, while speaking to a group of journalists on Wednesday, argued that the government has followed the example of several international economies that have already imposed various counter-veiling duties on imported steel products.
“We applaud the government’s ingenuity of providing an opportunity where importers can continue importing without having spillover effects on the local industry,” Pakistan Steel Manufacturers Association (PSMA) Vice Chairman Khalid Khan said.
FPCCI’s displeasure
The PSMA also questioned the statement released by the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) that registers its displeasure with the policy.
According to the organisation such a statement was issued before hearing the side of the ship breakers and steel melters which represent majority of the steel industry.
The FPCCI had issued a statement against the imposition of RD that irked ship breakers and steel melters. A representative from Amreli Steels, one of the largest re-rolling mills in Pakistan, said that there is ample capacity in the country to cater for local demand.
“Before the imposition of RD on steel products, a lot of mills were just utilising 40 to 60% of their capacity because imported products were being dumped in the market.”
“The regulatory duty will foster an investment friendly environment that will bring more capacity into the country,” he said. Quoting international publications, re rollers and steel melters said that Chinese steel companies enjoy heavy subsidies and for the first half of 2014 their subsidies accounted for four-fifths of their profits.
“How can we compete with manufacturers in exporting countries when their government provides export rebates of up to 13% in addition to electricity subsidies and tax breaks? It is not a matter of making our industrial units more efficient, it is a matter of an unfair competitive environment,” said one executive.
PSMA representatives said the imported goods will continue to come in the country but they will just be more competitively priced now and will provide a level playing field.
PSBA gives nod of approval
The Pakistan Ship Breakers Association (PSBA) on Wednesday welcomed the levy of 15% RD on the import of all steel billets, steel bars and wire rods.
PSBA release on Wednesday said that it appreciates the government for this bold move which has helped save hundreds of thousands of jobs as well as the local steel industry.
PSBA Chairman Dewan Rizwan Farooqi said that since 2010, the ship breaking industry has been providing 1.2 million tons of steel raw materials annually to the re-rolling, wire rod and steel melting industry.
Published in The Express Tribune, January 15th, 2015.
Welcoming the latest policy, leading steel melters and re-rollers on Wednesday defended the imposition of 15% Regulatory Duty (RD) on steel imports, citing that the heavy imports were adversely affecting the local industry.
The government’s decision has come as a response to lengthy lobbying on part of the steel industry, which was trying to secure its survival in the face of international competition. Steel melters, ship breakers and large scale re-rollers – that represent over 85% of the sector’s production capacity – approached the Federal Board of Revenue (FBR), and relevant ministries on the rising difference between locally manufactured and imported products that had swelled to Rs10,000-15,000 per ton.
As part of the policy the government is introducing a 15% regulatory duty on steel billets, bars and wire rods – a move that is meant to protect local industry. After the imposition of the regulatory duty, imported steel products are still Rs3,000-Rs5,000 cheaper than locally manufactured products, according to the industry experts.
The makers of different steel products, while speaking to a group of journalists on Wednesday, argued that the government has followed the example of several international economies that have already imposed various counter-veiling duties on imported steel products.
“We applaud the government’s ingenuity of providing an opportunity where importers can continue importing without having spillover effects on the local industry,” Pakistan Steel Manufacturers Association (PSMA) Vice Chairman Khalid Khan said.
FPCCI’s displeasure
The PSMA also questioned the statement released by the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) that registers its displeasure with the policy.
According to the organisation such a statement was issued before hearing the side of the ship breakers and steel melters which represent majority of the steel industry.
The FPCCI had issued a statement against the imposition of RD that irked ship breakers and steel melters. A representative from Amreli Steels, one of the largest re-rolling mills in Pakistan, said that there is ample capacity in the country to cater for local demand.
“Before the imposition of RD on steel products, a lot of mills were just utilising 40 to 60% of their capacity because imported products were being dumped in the market.”
“The regulatory duty will foster an investment friendly environment that will bring more capacity into the country,” he said. Quoting international publications, re rollers and steel melters said that Chinese steel companies enjoy heavy subsidies and for the first half of 2014 their subsidies accounted for four-fifths of their profits.
“How can we compete with manufacturers in exporting countries when their government provides export rebates of up to 13% in addition to electricity subsidies and tax breaks? It is not a matter of making our industrial units more efficient, it is a matter of an unfair competitive environment,” said one executive.
PSMA representatives said the imported goods will continue to come in the country but they will just be more competitively priced now and will provide a level playing field.
PSBA gives nod of approval
The Pakistan Ship Breakers Association (PSBA) on Wednesday welcomed the levy of 15% RD on the import of all steel billets, steel bars and wire rods.
PSBA release on Wednesday said that it appreciates the government for this bold move which has helped save hundreds of thousands of jobs as well as the local steel industry.
PSBA Chairman Dewan Rizwan Farooqi said that since 2010, the ship breaking industry has been providing 1.2 million tons of steel raw materials annually to the re-rolling, wire rod and steel melting industry.
Published in The Express Tribune, January 15th, 2015.