Rod prices remain high despite suspension of new VAT law | 2017-07-07 |

Rod prices remain high despite suspension of new VAT law

UNB     7th July, 2017 06:12:25 printer

Rod prices remain high despite suspension of new VAT law

The prices of MS (mild steel) rods remain 'abnormally high' in the domestic market though the government has stepped back from imposing a uniform 15 percent VAT amid mounting pressure from the business community.


The price of per tonne MS rod is now Tk 48,000 in the local market against Tk 38,000 per tonne in May-end this year, meaning a sudden price hike amid the speculation of 15 percent uniform VAT (Value added Tax) from July 1.


A market study in the city's Bongshal, Noyabazar and Raishabazar areas revealed that per metric tonnes MS road was selling at Tk 8,000-10,000 more than the rate before the beginning of the budget session in Parliament.


Experts and business leaders, however, said if the prices do not turn normal, it will subsequently have a negative impact on the growth of infrastructure sector on which the government has a major focus on development.


Talking to UNB, FBCCI President M Shafiul Islam Mohiuddin said it will be unethical if they increase the prices without any valid reason.


"We've to look into it. We've not seen any reason yet. We'll further look into the matter. But, the FBCCI won't support it if anybody wants to take advantage of doing business unethically," he said.


Former chairman of Bangladesh Auto Re-Rolling and Steel Mills Association Chairman Sheikh Masudul Alam Masud, however, said there has been a price hike of Tk 4,000-5,000 per metric tonne not Tk 8,000-10,000.


"This price hike we witnessed before the budget and the reason behind this is the price hike of raw materials which is yet to come down," he told UNB.


Prominent economist Dr AB Mirza Azizul Islam said the government needs to look into it and find out the reasons behind the price hike of rods.


"It's necessary to look at the international market and adjust it with the domestic market," the former adviser to a caretaker government told UNB.


Dr Aziz said the government needs to create a logical market for this product in consultation with businesspeople as this product is largely used in the infrastructure sector.


Centre for Policy Dialogue, a civil society think tank, says there should be a logical ground if the price of rods increases in the domestic market.


"We need to look at the internal market's links to the issue with due importance. If businesspeople increase the price, they should have logical reasons," said CPD Executive Director Prof Mustafizur Rahman.


It will not be acceptable if they only say the prices of rods increased due to price hike in the international market and costly raw materials, he said adding that the government needs to monitor the market and create a competitive situation.


World Bank economist Zahid Hussain said the price hike of any product decreases the purchasing capacity of consumers.


"But it's harmful to the economy if the prices are hiked through any syndicate or artificially. If the government can't monitor it, the market will lose the competitive edge and a certain quarter will be benefited," said the World Bank economist.


He said the government has a special focus on infrastructure sector and the rod is the key item. "Project cost will increase if the rod price increases. So, the competitive market is essential."


According to Trading Corporation of Bangladesh, per metric tonne MS rod (60 grade) is selling at Tk 53,500 to 54,500 in the retail market while it was Tk 45,000 to 46,500 last year during the same period showing a 18.03 percent rise in the price.


Meanwhile, per metric tonne MS rod (40 grade) is selling at Tk 43,000 to 45,000 which was Tk 43,000 to 44,500 during the same period showing a 0.57-point rise in the price in the same cases.


The government suspended the Value Added Tax and Supplementary Duty Act of 2012 for the next two years amid pressure from the business community.