Removal of FED on tribal areas: Govt move to destroy steel sector, other industries: PALSP

ISLAMABAD: The government decision of removal of the Federal Excise Duty (FED) on erstwhile tribal areas will be most damaging for the entire industry of the country, particularly the steel sector.

Pakistan Association of Large Steel Producers (PALSP) Thursday appealed to the government not to take any decision without consultations with the stakeholders.

This was conveyed to the prime minister by the patron in chief of PALSP, Abbas Akberali, as well as the Chairman of the Association, Javed Iqbal.

They urged the government to maintain a status quo as the decision of the government will be detrimental for the steel sector as well as for the economy of the country.

The decision will encourage unfair competition by totally disturbing the level-playing field within the steel sector.

The steel sector works on thin profit margins and removal of the FED will give huge advantage amounting to over Rs 23,000 per ton to the steel industry of the Fata, Pata in comparison to the steel industry in rest of the country.

Unfortunately, this would be an anti-competition measure on the part the government.

Already, the decision has sent shock waves to the struggling local steel sector.

During the years 2019-2020 the steel sector has been in a state of serious crisis.

However, only recently the local steel industry started coming out of the crisis and practically started breathing.

Apart from creating crisis for the local industry, the decision has also upset the Chinese investors, who are establishing the first steel unit in the Rashakai Special Economic Zone with the sole investment from a Chinese group.

As a result of the government’s abrupt policy shift, the local as well as Chinese investors are worried about the future prospects of their investments in the country.

The PALSP strongly protests against the detrimental decision of removal of the FED on Fata, Pata, which was taken without carefully considering about consequences of the decision as well the likely damage to the struggling steel industry of the country.

The decision was taken just 2/3 days before the budget under pressure from political lobbies of the country mostly from KP and Fata, Pata, who by remaining behind the scenes are the real beneficiaries of decision.

This may be mentioned here that Pakistan’s long steel sector has been providing steel for the government’s mega projects and especially for the CPEC-related projects and the PM’s Naya Housing project on most competitive prices.

At this point in time the price of bars in Pakistan is lower than China, Turkey, the UK, the USA, South Asian countries as well as CIS.

Copyright Business Recorder, 2021