Domestic cement consumption registers 8.07pc growth in May

June 3, 2015 Off By Web Desk

Karachi: Robust growth of 8.07 percent in domestic cement consumption in the month of May 2015 was overshadowed by most depressing decline of 26.13 percent in exports that resulted in overall decline of 0.39 percent in the cement despatches compared with May 2014.

A spokesman of the All Pakistan Cement Manufacturers Association said that the cement industry in Pakistan is still operating below capacity despite almost 7.98 percent growth in the domestic consumption during the first 11 months of this fiscal. He said overall decline in exports in the first 11 months of 2014-15 was 10.82 percent that restricted the total growth in the industry to only 3.47 percent.

The data released by APCMA reveals that cement industry despatched 25.492 million tons of cement for domestic market during July-May period of this fiscal against 23.608 million tons despatched during the corresponding period last year. The exports that were 7.448 million tons in the first 11 months of last fiscal plunged to 6.642 million tons wiping out most of the gains achieved on domestic front. It is worth noting that the overall exports from South registered an increase of 4.5 percent. These exports go through the sea. However exports from North declined by 18.30 percent due to Iranian cement factor as exports from the North usually go to Afghanistan.

Cement manufacturers have expressed concerns over the apathy of the planners on regular decline in cement exports particularly to Afghanistan where Iranian cement is making rapid inroads, APCMA spokesperson appealed the government to support local manufacturers in winning back the Afghanistan market by withdrawing duties to enabling them to compete with highly subsidized Iranian cement.

He also demanded placing Iranian cement in Negative List and invoking Dumping Law against it as huge quantities are being dumped into border area markets in Baluchistan. He stressed that smuggling of cement from Iran to Baluchistan is resulting in substantial losses to the national exchequer. He regretted that the warnings by the cement sector about inroads by Iran in Afghan market were ignored by the policy makers whereas it has now penetrated the local Baluchistan market as well. ‘The government has to take immediate steps to curb this menace and above mentioned demands from the industry are the right solutions,’ he added.

The spokesman said that the industry has been demanding level playing field from Federal Govt and has suggested some measures in the upcoming budget. Cement industry is subject to Federal Excise Duty at the rate of 5% of retail price and General Sales Tax at the rate of 17% of maximum retail price, which sums up to Rs. 100 per bag approximately. This incidence of high taxation encourages evasion and negatively impacts consumption.

The spokesperson said that the cement is not a luxury item thus government should reduce FED stepwise to zero, as announced by the previous government, to not only encourage cement consumption but to curb eliminates tax evasion as well.