Encouraged by consistent domestic demand and government’s thrust on sizable infrastructure projects, the cement industry has planned to increase its capacity by 26.25 million tons to ensure smooth growth of the economy.
The All Pakistan Cement Manufacturers Association (APCMA) Chairman said this while reviewing the six months performance of the industry. He said the industry posted a growth in the first half of current fiscal as the total cement dispatches reached 19.81 million tons. He said growth trend indicates that in next two years the current production capacity of 46 million tons would be insufficient to meet the domestic demand. He said the industry is making massive investments to add new capacities.
The Chairman APCMA said the cement production capacity would increase in two to three years to 72.25 million tons. This, he added, means that the cement industry has envisaged additional domestic sales of 26-28 million tons. He said this huge capacity would create additional revenues for the government. He said cement consumption is considered a strong barometer of economic growth. The government, he added, should consider reducing taxes to boost cement consumption.
The Chairman said cement is one of the most updated and technologically advanced industries of Pakistan that needs government support. He said in current scenario, suggestion given by some circles of abolishing import duty will hit the national kitty and industry as well. He said Pakistan operates most efficient cement industry that has made inroads even in Indian market despite tariff and non-tariff trade barriers. He said the Pakistani industry should also be protected in the same manner. He said if the government is interested in reducing the cement rates then it should reduce the levies on domestic production.
In last fiscal budget, he added, the government increased taxes on cement from Rs600 to Rs1,000 along with sales tax of 17 percent, while the industry previously paid Rs2,492 per ton. Now this difference of tax increase will augment further government revenue from Rs2,492 per ton to around Rs3,250 per ton. Industry paid approximately 83 billion rupees in 2015-16 and is among the highest contributors to the national exchequer over the last four years and has paid Rs189 billion in taxes.
However, according to data released by All Pakistan Cement Manufacturers Association, during the first half of current fiscal year, the cement industry has posted a growth of 11.07 percent in local dispatches compared with local dispatches during same period of last fiscal year. Exports recorded a decline of 3.53 percent compared with exports during the same period of last year. The overall situation during first half of current fiscal year showed 8.65 percent growth compared to the same period of last fiscal year.
The data further revealed that domestic dispatches in December 2016 were 3.186 million tons registering a growth of 6.74 percent while the exports amounted to 0.369 million tons reflecting negative growth of 18.98 percent compared to December 2015. Total cement dispatches in December amounted to 3.555 million tons depicting a growth of 3.33 percent. Capacity utilization for the month of December 2016 was 90.88 percent.
During the month of December 2016, exports to Afghanistan decreased from 0.201 million tons in December 2015 to 0.149 million tons showing a decline of 25.72 percent. However, exports to India registered healthy increase from 0.053 million tons in December last year to 0.087 million tons during the same month this year, showing growth of 63.20 percent. Exports to India are mainly carried out through Wagha border and southern coast of India.
The Chairman expressed concern over falling exports to Afghanistan that have declined in the first six months of this fiscal by 11.72 percent. They said cement exports to India have registered an increase of 79.64 percent during July-December 2016 period from a very low base.
Saigol said there is a strong need to cut down duties and taxes to bring down the prices and facilitate consumers which would also help industry grow.
