Bangladesh: Steel Trades Quiet on Expected New VAT Implementation

New VAT law in Bangladesh will negatively affect steel industry & infrastructure projects, says steelmakers based in Dhaka, Bangladesh.

The Industry participants mentioned that, new VAT law which expected 15%; will be imposed from the coming fiscal year i.e. 1st July'17 resulting in the steep fall in the demand amid domestic users. And this high percentage of tax will considerably increase the steel prices and adversely affect the infrastructure of the country affecting the demand in domestic market.

The re-rolling mills owners last week urged for lowering the VAT to highest 5% stipulated in the new VAT law. Earlier, the VAT was at approx 5-7% for special steel manufacturers, according to sources.

Another big reason for fragile sentiments is ongoing monsoon season in Bangladesh which in turn halting construction activities in the nation amid healthy inventories for long steel products with the manufacturers and stockiest as well.

On further assessment, due to this VAT and supplementary act and rains in the country, traders are hesitant to purchase the materials further as they were already loaded with the stocks previously.

Currently rod/bar offers in Bangladesh are 45,000-47,000/t Tk. Once the law comes to force; the prices will soar to 52,500-55,000/t (multiplying the VAT 15-20%, amount 7,500-8,000 Tk).