ISLAMABAD:Â The local steel industry, which sees a severe cash crunch and a drastic reduction in demand amid the global crisis caused by coronavirus, has demanded the government to provide a ’12-month facilitation package’ to avoid a complete meltdown of the economy.
In a letter to Adviser to Prime Minister on Finance and Revenue Abdul Hafeez Shaikh, the Pakistan Association of Large Steel Producers (PALSP) has demanded multiple reliefs in taxes and duties for at least a year to overcome the impacts of coronavirus.
“The virus issue is sure to leave many businesses bankrupt and hundreds of thousands unemployed unless the government acts immediately,” the association said, suggesting the government to take prudent measures to evade the prevalent crisis.
As per the letter, the association has demanded an immediate cut in interest rates to 5pc for the next 12 months; the US has recently cut its rates to 0pc.
“All principal payments for long-term and short-term loans should be deferred for the next 12 months while the industry can try to service interest at a reduced rate of 5pc. Besides, the minimum rate of turnover tax for industry and retailers should be reduced to 0.25pc with immediate effect,” PALSP demanded.
The association also requested the government to remove regulatory duty (RD) and other import duties on steel meltable scrap as it is a primary raw material for the steel industry. “All duties & taxes on PCT 7204.4920 for unserviceable auto parts be reduced to zero per cent.”
It suggested that a 100pc adjustment of sales tax input may be allowed against the available output. Currently, steel companies are required to withhold 10pc sales tax even though full adjustment is available.
As per the steel industry, the government should immediately issue orders to adjust full sales tax (input) to all documented steel industry on their opening inventory of July 1, 2019. “Billions of rupees are stuck with FBR, despite a clear understanding of the change in sales tax regime. The fixed Import Trade Price (ITP) on the scrap of $360 per tonne may be removed and taxes should be collected on the actual transactional values.”
As per an estimate, Pakistan’s initial economic losses in different sectors of the economy would be over Rs1 trillion. These losses are going to be incurred on account of a drop in the GDP growth because of reduction in the services sector, including airline business and others, FBR’s revenue loss, massive decline in imports, exports, reduction in remittances, disruption in food supplies and other fronts.
According to officials of the Ministry of Commerce, the exports might face loss in the range of $2 to $4 billion as orders had gotten cancelled. For the closure of major port operations and retailers globally, reduced global demand was likely to lead to reduced global economic growth.
