Ship-breaking industry must be saved

Contrary to trade bodies' traditional pre-budget focus on demand for incentives and facilities, the Pakistan Ship Breakers Association has displayed confidence in government policies, with a marked emphasis on their continuity. This has reference, in particular, to the observations its Chairman Azam Malik made in an exclusive interview with this newspaper.
The way he dwelt upon ship-breakers' problems and potential, will undoubtedly point to the resilience of the industry and its positive outlook for the future, notwithstanding the unchecked decline in its performance during recent years. Some idea of this may be had from their resolve neither to seek any tax relaxation in the forthcoming budget, nor change in the existing duty and tax structure.
For as Malik pointed out, deviations at this stage could retard the pace of progress towards revival of the industry that had hit the rock bottom about six years or so ago. It will also be noted that their argument for continuation of tax-related scheme of things is not ship-breaking industry specific, but also takes account of the likely woes of the nation's steel industry as a whole.
This should leave little to doubt about the reference he made to the support extended to the ship-breakers' plea not only by Pakistan Steel Mills and Pakistan Melters Association, but also by Central Board of Revenue (CBR) during recent meetings.
Evidently, the stance adopted by the ship breakers at this stage of the looming crisis, worst in the industry's history, will appear to be based on fears that the government might take recourse to a policy change for its own reasons. Noteworthy in this context are the detailed references made to the catastrophic downturn in the performance of the industry over a decade and the persistent fall in the tax revenue, to Rs 160 million in 2005-2006, from the peak of Rs 5.3 billion touched way back in 1998-99.
The likelihood of some kind of an effort to raise the level of the industry's contribution to national kitty, therefore, cannot be ruled out. Perhaps, to avert the debacle to the industry such a move could mean, the PSBA chief laid emphasis on the appropriateness of the system in vogue.
As he explained, the import duties and valuation assessments are done at present on the basis of detailed studies and thorough examination by relevant ministries and authorities of the costs incurred, especially, by ship-breakers and steel melters, in converting raw steel into products.
He maintained that the ship breaking industry is poised to contribute as much as about Rs 2.560 million in tax and duty to the national kitty under the existing arrangements, besides providing direct employment to 30,000 workers at Gadani alone and to 70,000 people indirectly.
However, he linked the prospects to an effective check on illegal imports of substandard material and their access to the country's steel markets. As for the steps in that direction, he said it would be advisable to impose 25 percent regulatory duty on the import of "Pipe Phara" (steel junk), saying this would not only discourage import of substandard material but also restrain the use of construction bars made from substandard material, which does not conform PSI standards.
It cannot be over-emphasised that the ship breaking industry must be saved from collapse, as steel obtained from dismantled ships is unmistakably regarded as reliable and internationally acknowledged source of competitive supply of quality steel scraps to the steel sector.
More to this, as Malik noted, dismantled ships also yield cheapest non-ferrous metals like copper, brass, aluminium, in addition to used machinery, generators, boilers, wood and tools, thereby, helping other sectors of industry and commerce to a considerable extent.
Notable, in this regard, is the industry's assertion that ship-breakers have heavily invested in their yards at Gadani to contribute one million tons of ship steel annually, while also helping to stabilise steel prices to the advantage of steel consuming sectors. All in all, time has come to secure the future of the ship breaking industry in the larger interest of the nation's economy.