Prioritise local bitumen industry

2 July, 2021 12:00 AM printer

For a country making every possible effort to ease import dependency, it is self-contradictory to impose unjust tax on local production of bitumen, relaxing the rule on its import. It is like disfavouring our local industries, but at the same time, it runs counter to the government’s policy of prioritising our local industries. So, we are baffled and beg to ask – why is this double-standard? Why entrepreneurs would invest in the local bitumen industry and how the sector would flourish if the investors are obligated to pay almost 26 per cent tax while importing costs less?

Since the beginning of its journey, the bitumen sector in our country has been passing through a tough time. Instead of taking steps to protect, strengthen, and grow the bitumen industry using a variety of tactics, including tariffs, import quotas, and subsidised government loans, a group of policymakers have been imposing supplementary duties on imports of raw materials of bitumen production, while they ease such duties in the case of importing refined bitumen which in many occasion found to be sub-standard in quality, resulting in more investment in constructing and repairing roads and highways, a basic of infrastructural developments. Therefore, there is no doubt that the higher tax on local bitumen production compared to low-quality imported bitumen conflicts with the national interest.

However, the situation is expected to be just the opposite, as far as our national interest is concerned. The dependency theory clearly elaborates on how resources flow from a ‘periphery’ of poor and underdeveloped states to a ‘core’ of wealthy states, enriching the latter at the expense of the former. As a result, reducing dependency on exported products through the local production of industrialised products is considered one of the best economic development policies around the globe. The policy targets the protection and incubation of newly formed domestic industries to fully develop sectors so that the goods produced locally are competitive with imported ones.

We have the example of helping our cement industry by imposing 300 per cent duties on cement import back in 2000. The cement industry now produces 43 per cent more than the local demand, and thus an opportunity has been created to earn foreign currency through export. Such initiatives have become inevitable for the bitumen sector as well. We have potentials. To transform that potential into reality, all we need is just a policy reformation.