Price hike halts all development works

20 m people seriously affected

Golam Mostafa Jibon: Country’s infrastructural development works are being hampered drastically due to unbridled price hike of construction materials. If the situation continues, implementation of most mega projects like Padma bridge may face uncertainty, experts said.
Sources said, trade and commerce have been severely affected by the global epidemic. Like other countries in the world, it has had a negative impact on Bangladesh. Almost all types of businesses are called one type of collapse. Many have already been forced to shut down the shutters of businesses due to the financial crisis. Corona also has an impact on the country’s construction sector. Many businessmen have fallen in crisis after investing from bank loans and savings. After a long time since the corona infection has gradually subsided, people have started building houses on their own after a long time. Besides, real estate business has also started to turn around. But the crisis is growing again as the prices of construction materials continue to rise suddenly. Housing traders are in dire straits with a large number of flats under construction due to rising prices of rods, cement, sheets, angles, bricks, sand and stones, one of the main building materials. Those, who have personally started building houses after a long time, also have their hands on their heads. Meanwhile, with the increase in the price of construction materials, it has an impact on mega development works.
Many contractors have already slowed down their works. Rising prices of raw materials have led to a downturn in the country’s construction industry as a whole. In the meantime, the price of rod, one of the main building materials, has risen sharply and is now at an all-time high. Each ton of rod is now being sold in the retail market at Tk83,000 to Tk 88,000 depending on the company. Prices of angles, sheets, thick plates, thin plates, bricks, sand, stone and cement used in construction have gone up. However, in this year’s budget, Finance Minister AHM Mustafa Kamal has withdrawn advance tax on cement and steel industries. That is why, everyone was hopeful that the prices of construction materials like cement, steel and rod would come down.
Concerned traders said that, the prices of construction materials including rods have gone up due to the sharp rise in the prices of raw materials and ship freight in the world market. Raw materials are not available as per the demand due to increasing construction works in the world by overcoming the effects of Corona. On the other hand, despite the busy construction season, the demand for rods and other materials is high. However, traders also mentioned that, the price of rod-cement-brick will not come down till the price of raw material comes down. Work on the government’s development project has resumed in earnest, overcoming the stagnation in Corona. As well as the construction season, now the construction of buildings in cities and villages has increased. So, the demand for construction materials is also increasing in the market now. The prices of these construction materials have also started rising.
According to sources, the rod market, which has been growing uncontrollably for several months, is rising again after remaining stable for some time. Tk 1000 has increased against per ton this week. However, despite the increase in the price of rod, the price of wholesale cement remains the same. However, at the retail level, the price of cement has been increased from Tk 10 to Tk 20 per bag.
In September last year, the price of good quality (above 60 grade) rods in the market was Tk 69,000 to Tk 70,000 per ton. It has been rising from October to Tk83,000 to Tk88,000 per ton, which is the highest price of rod in the history of the country.
In the space of a few months, the price of this material, which is one of the main constructions of houses and installations, has increased from Tk 13,000 to Tk 18,000 per ton this week. Earlier, during the tenure of the former caretaker government (after January 2007), the price of a ton of good quality (above 60 grade) rods went up to Tk 80,000. That was the highest price of rod ever in the country’s market. Later, the price of rod came down to Tk 45,000. At the end of last year, the price of rod rose to 81,000.
Consequently, private home builders and real estate traders are in trouble. Traders fear the price could rise further. On the other hand, due to the increase in demand, the prices of bricks and cement, one of the building materials, have gone up.
The price of each brick has increased from Tk 3 to Tk 4. Good quality brick called as no-1 used to be sold for Tk 9,000 per thousand, now it is being sold for Tk 13,000. Second grade bricks are being sold for Tk 11,000 to Tk 12,000. But, good quality bricks have been sold for Tk 9,000 to Tk 10,000 before.
Savar DBS Brickfield Manager Moklesur Rahman said, one ton of coal was Tk 7,000, it has increased to more than Tk 14,000. Its price has gone up due to the coal syndicate.
The price of cement in the retail level has increased by Tk 10 to Tk 20 against per bag. Cement is being sold at Tk 500 to Tk 550 per bag. But a few months ago, cement was available between Tk 390 and Tk 450 per bag. The dealers claimed that, theowners have increased the prices of cement at the factory level. So, the retail price of cement has gone up. On the other hand, the factory owners said that, due to the rise in the value of the dollar, the freight of the ship in clinker transport has increased. Besides, additional expenditure is being incurred on the purchase of clinker. Therefore, due to increase in cost at the production stage, it has been adjusted with the price of cement. However, the owners did not directly announce the price increase. However, those concerned think that, the raw material crisis is the main catalyst behind this abnormal price hike.
The price of raw material scrap metal or melting scrap for making rods is now higher in the world market. Traders have to buy the metal at more than double the price of last year. Meanwhile, the price of coal, the only legal fuel for burning raw bricks in brick kilns, has also gone up. The owners of the kilns complained that, the price of this fuel has more than doubled per ton due to the syndicate in selling coal. As a result, the price of bricks naturally goes up.
Meanwhile, those involved in this sector are also in trouble due to the increase in the price of rod, one of the components of construction materials. Meanwhile, traders in the sector have demanded reduction of taxes and VAT in the next budget to control rod prices.
Manwar Hossain, President of the Bangladesh Steel Manufacturers Association (BSMA)told The Daily Industry that, “The production cost of rod has also increased in the country due to rising prices of raw materials and chemicals in the international market. In this situation, the traders of this sector have demanded to reduce the tax and VAT in the next budget to control the price of rod.”
Meanwhile, with the rise in the price of construction materials, it has affected the real estate business as well as big contractors. As a result, the cement, brick, sand, stone, hardware and tile factories involved in the construction industry are going to face a disaster. If measures are not taken to rectify this problem right now, construction and infrastructural development of the country will be hampered and about 20 million people of different classes and professions involved in construction and infrastructure development will be highly affected. As a result, there is a possibility to occur an economic disaster in the country.
The FBCCI, the country’s top business body, has expressed doubts about the timely completion of infrastructural development projects undertaken by the government due to rising prices of key raw materials in the construction and infrastructure sectors a few months ago. In such a situation, the top traders’ association has sought permission to import rods to cover the construction cost of the project.
At the same time, the FBCCI has requested for provision of compensation to the contractors in case of increase in project cost due to government policy.
FBCCI President Jasim Uddin urgedintervention of the Prime Minister to curb the unreasonable rise in prices of construction-related products in the country and to resolve the ongoing instability in the construction sector.
Engineer SM Khorshed Alam, President of the Bangladesh Association of Construction Industry (BASI), an association of contractors said that, they were concerned about the timely completion of ongoing works as prices of construction materials including rodshave increased sharply. The costs have increased. Because, when they submitted the tender, there was no opportunity to fix the increased price for fear of increasing the price of this construction material. But now, they have to buy at increased prices.
He said, rods are needed 25 percent to build any steel-based infrastructure. If the price of this rod increases by 25 percent, then the cost of the whole project increases by 6 to 7 percent. But in the current competitive market, it is not possible to get 5 percent profit from any project.
Alamgir Samsul Alamin, President of Real Estate and Housing Association of Bangladesh (REHAB) said, “The rise in prices of construction materials has had a direct impact on the housing sector. After a long time,when the business has started to become somewhat normal, the housing sector has suffered huge losses due to the impact of rising prices.”