Ministers hear of steep rise in steel prices
The Ministers of Finance and Commerce on Monday heard from stakeholders in the construction sector that there had been a steep rise in steel process.
A release yesterday from the Ministry of Tourism, Industry and Commerce said that while the cost of sand and cement has remained fairly stable, the price for steel has “skyrocketed due to increasing product and freight costs”.
The release said that this was the general sentiment expressed by stakeholders of the construction sector during a meeting with Minister of Tourism, Industry and Commerce, Oneidge Walrond, and Senior minister with responsibility for finance in the Office of the President, Dr. Ashni Singh. The meeting took place at the Arthur Chung Conference Centre.
According to the release, Walrond said that the engagement was to deal with the price hikes reported for some construction materials. She said that the Government wanted to meet with stakeholders to better understand the factors responsible for the increase in cost of these materials.
As part of the budget in 2020, the release noted that the Government had announced the removal of VAT on building and construction materials. However, the release said that consumers and contractors have been complaining about the steadily rising cost of materials. These hikes are also a concern to Singh who warned that it is illegal to charge VAT on zero-rated materials. The release added that the minister’s caution was based on complaints by stakeholders that some hardware stores have maintained the price of materials, even though VAT is no longer applicable on some items.
“We have been paying close attention to developments in the market for key construction materials, not only because the government is a large consumer and purchaser of construction materials, but also because we recognise that construction is going to be an important driver of the economy going forward,” Singh said, according to the release.
He added “We have been getting reports of some price movement, and so we are very interested in understanding how prices have moved and what might be contributing to the price movement”.
In sharing his perspective, Chairman of the Region 3 Tourism Committee, Halim Khan, said transportation cost was the main driver of the prices for the items. He suggested that a lower cost of fuel should result in a reduction in the cost of materials. Briony Tiwarie backed this view and stated that the increase in fuel prices has directly impacted the cost of materials because of higher transportation costs.
Mohamed Raffik of Central Corentyne confirmed that there has been a rise in the cost of materials. He said that the cost of materials from China has been increasing steadily. He said that the genesis of the price increase is the international market and has nothing to do with the Government of Guyana.
Also contributing to the meeting via Zoom was Christopher Persaud of David Persaud Investments who reported that the price of steel has increased by more than 20% and it remains in short supply. He further said that shipping rates have also increased by over 400%.
Singh noted that the Government has moved away from fixed prices and a regulated market to a more open and competitive environment. He added that the world market largely dictates fuel prices and while the Government can intervene by lowering taxes, that move would have limited effects on the overall cost of fuel.
The release said that Singh promised to examine the legal and administrative implications of adjusting taxes associated with shipping costs.