Bangladesh Cement Manufacturers Association (BCMA) recently submitted its comprehensive pre-budget proposal to the National Revenue Service, calling on the government to implement comprehensive tax reforms to help the domestic cement industry cope with rising production costs and sharply declining capacity utilization. The association pointed out that in the current complex environment of economic slowdown and global conflicts, the industry is facing unprecedented pressure to survive and urgently needs to be relieved through fiscal policy adjustment. The core demand of the
association is to reduce the import tax burden of key raw materials. The BCMA proposed to replace the existing 15% tariff on cement clinker, the industry's most critical raw material, with a fixed tax of 500 Taka per ton, arguing that this would significantly reduce production costs. At the same time, the association demanded that the withholding tax on essential inputs such as clinker, slag, limestone and gypsum be reduced from the current range of 2% to 5% to 0.5%, and proposed that the withholding tax on imported raw materials be reduced from 2% to 1% to ease the financial pressure of enterprises relying on imported raw materials. In addition, the abolition of the 10% additional tax on limestone is also one of the key demands. The association emphasizes that the tax increases the unnecessary cost burden and will reduce the price of cement and stimulate the demand for construction.
From the perspective of industrial fundamentals, the problem of overcapacity in Bangladesh's cement industry has reached a shocking level. Mohammed Amir Haq, chairman of BCMA, revealed that the industry has invested heavily in response to infrastructure growth expectations, with an annual installed capacity of nearly 100 million tons and an effective capacity of about 82 million tons. However, the annual cement production in 2025 does not exceed 40 million tons, which means that the capacity utilization rate is less than half of the effective capacity, far below the 60% to 65% threshold required to maintain the sustainable operation of the industry. This serious idle capacity not only leads to waste of resources, but also makes enterprises bear tremendous pressure on fixed cost sharing.
In addition to structural overcapacity, the industry is also facing multiple external shocks. The combination of rising interest rates, growing input costs, and weak demand associated with global conflict is a serious crisis situation. Haque stressed that tax rationalization reform will help the industry absorb the current multiple shocks, and timely policy support is essential to maintain the survival of enterprises. Industry experts warn that without immediate fiscal relief, the industry, which has significant capacity potential and plays a key role in supporting national infrastructure development, may find it difficult to maintain growth momentum and even face the risk of a large-scale industrial recession.
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