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Wednesday, June 25, 2008
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Biz Letters

Anomalies in the steel industry


I would like to highlight the following serious anomalies in the Budget in regards to the steel industry.

The government, in order to reduce steel prices and contain price hikes, has reduced duties on scraps to flat rates. Scrapes and ship breaking scraps are now both on fixed rate duties and both are raw material sources for steel rolling mills.

Duties on 'Billets', another raw material being imported regularly, has been kept on ad valorem taxes, which means that billets will cost nearly Tk 5,000 more than it would cost to import scraps. Hence, the prices of quality rods from billets will be costlier than rods from scraps based mills.

Scraps are available at $650 per tonne and billets are available at $1205. With such import prices, why has ad volerem duties been enforced on billets? If one segment of the industry is to get fixed rates, the other segments should also get the same treatment.

Imported rods and billets are available at $1100 and $1205 per tonne in Chittagong, respectively. Duties on both these items are 7 percent with no VAT on either. How can rolling mills, based on billets, survive with such apparent anomaly? Is it not a fact that some vested quarters want the billets based mills to close down?

The country's demand can never ever be met with scrap based on rods. Billet imports will have to be done regularly. The Budget, as given now, will rather let billet based mills increase their prices further up and the rods from scraps based mills will follow suit!

It is expected the government will be fair to all concerned. However, killing one segment of an industry at the cost of another segment is really harsh. Like steel, oil prices are also increasing and our government is bearing the entire brunt. But by killing the billets based industries at the cost of scrap-based rolling mills is really harsh and unacceptable.

If billets based mills closed down, the prices of rods will go sky high.

Alihussain Akberali, Chairman, BSRM Steels Ltd, Chittagong.

Shrimp export and sea turtle conservation


I was attracted to the news item, 'Bangladeshi shrimp plants fully compliant' on the business pages on April 19. There is no doubt that the shrimp industry is the second largest foreign exchange earner for Bangladesh. This is one side of the story because the costs are borne by nature and the ecosystem.

I am going to highlight an issue related to the conservation of sea turtles and shrimp trade.

In 1987, the United States required all trawling shrimp boats to equip their fishing nets with turtle excluder devices (TED). As a follow-up, two years after the shrimp-turtle law was implemented, the US required all countries that they imported shrimps from to certify that the boats were equipped with TEDs. Countries that could not guarantee the use of the escape devices were banned from exporting shrimps to the US, Bangladesh being one of them.

However, the ban was lifted, explaining that the shrimps exported by Bangladesh are cultured in hatcheries. The question still remained on whether the shrimp trawls collecting the mother shrimps used TEDs.

The Ministry of Fisheries & Livestock claims that TEDs are installed in some shrimp trawlers but the reality is different. In Bangladesh, the sea turtles are more threatened by the fishing nets. More than a thousand sea turtles were recorded dead from fishing nets last year. Sea turtles are recognized as endangered species worldwide and many countries, including Bangladesh, are working for its conservation. Moreover, Bangladesh is a signatory to the Convention on Biological Diversity and Convention on Migratory Species.

Most of the dead turtles are adult female sea turtles that come to nest on the beaches. Only one in a thousand hatchlings survive till maturity and it takes 25-30 years for a sea turtle to reach adulthood.

Bangladesh is not on the recently published list of the US State Department certified TED users. In addition to lobbying for increasing shrimp export, the government should note this and take appropriate steps.

S. M. A. Rashid, PhD, Mohammadpur, Dhaka

RMG workers' riot


Jute was once considered the golden fiber of Bangladesh. Now the garment industry has taken over and it plays an utmost role in enhancing the financial condition of the country. However, this industry is facing a competitive world market. We are far behind the global market in terms of proper representation and implementation.

Production depends on various things. Workers' satisfaction is one of them. Keeping a good relationship with the lower level workers is not very common, but collision between the workers and the owners is. Why they riot, is somewhat known to us.

Industry owners think negatively and try to cut costs. The salary that the workers get is not enough to prosecute life in the city and they do not feel complacence. Sometimes they do not get salary for months. Salary and job security must be materialized for the workers. The garment industries are set up in urban areas where the living costs are high.

Working duty has to be lessened because most of the workers are female. In general, they rush to work early in the morning and return at night. They wait for hours for transportation and sometimes they cover long distances on foot.

Internal domination is also a great issue. Some high level workers dominate over their subordinates. They sometimes physically torture and use slang if they do not listen to them.

We are also corrupted to think that female workers do not deserve high positions, even though the system is based on experience. Some female workers have small children and they face difficulties because they are not permitted to bring the child to work.

To save this productive industry and to make it competitive in the world market, the concerned authorities and the government should pay attention to reduce workers' riot. In conclusion I will say that the garment industry is a way to livelihood of the poor of the country.

Md. Tohidul Islam, Uttara, Dhaka.

Courier banking: a legal question


The scheduled banks in Bangladesh, as per the banking Company Act 1991, perform the business of banking. Banks sell some products and render various services to their customers. One of the most common services rendered is remittance (i.e. TT, DD, MT etc). Banks play a pivotal role in remitting funds from one place to another that helps the customer to transfer funds, aids in the hassle free movement of cash and reduces risks associated with carrying cash.

At present, courier services are largely remitting funds, which is a clear violation of the law. They transfer money through phones where the cell number of the customer is used as an account number. Such illegal business has two aspects. The positive aspect is that the customers, especially common people, who have no access to formal financial systems, get prompt and smooth services in remitting funds. The negative aspect is that it has no legal base and the government is losing revenue. Banks have to pay 15 percent VAT on the service charge on remits but courier service does not pay the same to the government.

Considering the facts elucidated above, my suggestion in this regard is that either these kind of business should be stopped by the Bangladesh Bank for the safety of the customer or it needs to be legalised by the law to protect the customers' security.

In this case they should be permitted to perform this business on a limited scale. For example, they might be allowed to remit funds up to Tk 10,000 and when the business is legalised, the customers, especially common people, can get services easily and the government can earn revenues as well.

I want to urge all concerned, especially the central bank, to consider the matter seriously and take necessary steps soon in the interest of the common people.

Dewan Mosharrof, Sirajganj.

Dare to dream bigger? Re-conditioned car imports on the rise


Under the prevailing economic sluggishness of the country, a sharp rise in the import of cars raises a number questions in the public's minds.

A large number of car imports means a large payment obligation, commented the NBR chief, while he was on a surprise visit to assess the unusual situation at the Chittagong Sea Port. This clearly indicates that such imports of luxury items will take a toll on the already slender foreign exchange reserves.

A special ship, the 'MV Lilac Ace', sailing from Japan, carried 1988 vehicles, mostly cars and minibuses and arrived at the Chittagong Port. It was said to be the largest ever single consignment of imported reconditioned vehicles just before the announcement of the budget.

However, we are not opposing the import of used or fresh vehicles for fulfilling the long cherished dreams of the middle class. We would like to categorically ask how long the middle class will use the used cars? Will they not be able to drive new cars made in Bangladesh, in the near future?

The investors in this sector may mull over setting up a car assembly industry under joint venture in the country. Our neighbour, India, has made significant progress in this arena.

Therefore, the policy makers and the business communities should think positively. Let us invite those car-exporting countries to set up their car manufacturing plants in Bangladesh so that the people can own cars at more affordable prices.

M.A. Binyameen, Chittagong.

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