Pakistan’s consumption up 8%, but exports fall

While Pakistan’s cement industry recorded strong domestic growth of 8.07 per cent in cement consumption during May, there was also a steep decline in exports and the sector is not performing to full capacity.

The decline in exports during May was 26.13 per cent which led to an overall decline of 0.39 per cent in the cement despatches compared with May 2014.

A spokesman of the All Pakistan Cement Manufacturers Association (APCMA) said the cement industry was still operating below capacity despite almost 7.98 per cent 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 per cent that restricted the total growth in the industry to only 3.47 per cent.

Pakistan’s cement industry despatched 25.492Mt of cement for domestic market during July-May period of this fiscal against 23.608Mt despatched during the corresponding period last year, according to the APCMA.

The government has moved to protect the cement industry with its federal budget that has some direct and indirect incentives for the domestic cement industry for next FY15-16 (July – June), which will increase demands for cement in country.

Finance Minister Ishaq Dar said the duty on cement imports as "preemptive action" to promote the local industry and avoid cement dumping. The minster has proposed enhancement of duty on import of cement, rationalisation of tax structure for construction industry/ housing development, a significant rise of 27 per cent in  Public Sector Development Programme (PSDP) allocation, a five-year tax holiday for establishing new manufacturing facility in northern province and reduction in corporate tax by one per cent are positive steps for industry.

However,  the government also proposes increase in duty on import of coal. According to finance bill, coal attracts one per cent customs duty. Since all other fuels attract higher duty rates, it is proposed that customs duty on Coal be increased from one to five per cent. The industry will comfortably pass on PKR2.0/bag (US$0.019) -PKR3.5/bag (US$0.034) to end consumers.