The Pakistani cement industry is poised to enhance the production to 35Mt in next three years from existing around 17Mt. It will be producing the surplus cement beyond the local consumption demands despite heavy taxation on this sector. Cement exports are noted at 90 per cent to Afghanistan with 10 per cent sold into the Middle East. A lack of export facilities hampers further sizeable growth.
Local producers say this situation is giving an edge to Indian cement industry, which has captured the Middle East markets because of having required facilities at its ports, while very few shipments of cement exported to ME are of small quantity, which is negligible as compared to Indian cement export.
Sources pointed out another hurdle faced by the cement sector is heavy taxation in this sector, which make 30 per cent total cost of cement production, excluding the taxes on inputs like electricity, furnace oil, gas, coal and materials. The taxes on cement industry are much higher in comparison with neighbouring India. The excise duty on per ton is Rs 750 in Pakistan, as compared to India where Rs350 per ton is charged on this account, whereas sales tax in Pakistan is 15 per cent and in India 12 per cent.
Sources insisted that the government, being the biggest consumer of cement should review the burden of taxes on local industry, which is already in trouble like other industries due to rising cost. The upward trend in the prices in almost all forms of energy is making the circumstances for the industry very uncertain.
The government should offer some relief to cement industry in the shape of cut of taxes to make it flourish in the days to come, said Pioneer Cement Executive Director Badaruddin Fakhri.
Fakhari said that enhancing per capita consumption could be increased by reducing the prices, which would be only possible through cut in taxes on the cement sector. "The government ought to consider it as like cement is a basic ingredient for one of the three necessities of life house, the others two bread and clothes", he asserted.
He also said the Karachi Port Trust (KPT) and the Export Promotion Bureau (EPB) should also undertake the work to provide bulk cargo handling facilities at ports to export huge surplus quantity of cement in future.