At present the country’s cement industry is producing surplus cement after meeting the local demand.
In this regard possibilities are rising for the cement sector to export more cement.
Proper policy support and incentives from the government for the cement industry can help it to grow further as well as help boost exports.
Experts say that at present, double tax and advance tax besides some other costs are the main barriers to the growth of the industry.
Bangladesh Cement Manufacturers Association (BCMA) in its recent proposal to the government has expressed such a thing. It said, like other sectors if the government provides export incentives to the cement sector, it would play a key role in earnings.
BCMA president Mohammad Alamgir Kabir said, “Government policy support is needed for further development of the sector. Export competitiveness will increase a lot if 15 percent incentive is given to exports without duty exemption. In addition, tariff barriers have to be removed from the main market for cement exports to India.
The infrastructure of land ports needs to be developed. There is potential for export to Nepal besides India.” The country’s renowned cement companies have produced different types of high-quality cement for the ongoing development project construction work. Local companies have been able to produce and supply high quality cement for construction of many mega projects like the Padma Bridge, Karnaphuli Tunnel, Rooppur Nuclear Power Plant and Matarbari power plant.
However, the price of the main raw materials for making cement clinkers goes up in the international market. It used to cost US$ 42 per tonne to import clinkers, now it costs US$ 46. In other words, the cost of importing clinkers per ton has increased by US$ 4. This trend of price rise is a threat to the growth of the industry.
According to the industry experts, the production cost of clinkers has increased due to the increase in the price of fuel - coal used in the manufacture of clinkers in the international market. And as China suddenly increased its coal imports, coal prices continue to rise. At the FOB or production stage, where the price of coal per ton was US$ 40 to US$ 42, it now stands at US$ 82.
Due to these reasons, the price of clinkers, one of the main raw materials of cement in the international market, continues to rise, which may affect the domestic cement market.
Mohammad Alamgir Kabir, also the Vice-Chairman of Crown Cement, said, “In recent times, new development work has started on a large scale in many countries. So, the demand for construction materials worldwide has increased tremendously in the last few months.”
He said, “All the basic raw materials of the cement sector in our country are import based. In that case, there is a possibility of changes in the price of finished goods in the domestic market in line with the international market.”
“Due to intense competition in the cement sector in the country, it is not possible to sell cement at a higher price outside the reasonable price. That is, there is no chance of monopoly. Only if there is an exception to the price in the international market, its effect is likely to be felt in our country,” he added.
The BCMA president said, "However, we would urge that in the interest of the development of this country, especially in the interest of middle-income buyers, reducing the additional tax imposed by the National Board of Revenue, to a tolerable level will actually increase its sales”.
For example, he said that adjusting the double tax and reducing the import duty from Tk 500 to Tk 250 will help to boost the industry to a great extent.
He believes that if it is possible to keep the price within the general buyers purchasing capacity, the revenue will also increase due to the increase in sales of cement.
Industrial economist Dr Khondaker Golam Moazzem told Bangladesh Post, “As the government is looking forward to diversifying the export basket, consideration can be made for providing export incentives to the cement sector”.
In addition, he also said, “As we are yet to be familiar as a cement export country, the government can take special measures with the country’s local manufacturers. But everything should continue maintaining compliance issues.”
According to BCMA, cement sales increased by 7.37 percent in 2019. In the previous year, the rate was 15.69 percent. The highest growth rate in recent times was 19.19 percent in 2016. From that year, the demand for cement in the government's mega projects increased. Due to this the growth also increases a lot. Now the demand for big projects is declining. Moreover, the demand for individual-centric housing is growing very low. Due to these reasons, a lot of cement was unsold last year.
At present, out of 38 cement factories in the country, 34 are in production. Of these, 30 are local companies. Together, all the companies have produced 3.36 crore tons of cement in the country in 2019.
