Cement industry's contribution to exchequer highlighted

The cement industry is among the highest contributors to the national exchequer over the last four years and has paid Rs 189 billion in taxes. The contribution has more than doubled from 39 billion rupees in 2012-13 to approximately 83 billion rupees in 2015-16.
"Though the industry posted growth in these years with despatches rising to 38.87 million tons from 33.43 million tons in 2012-13, the growth in government collection is mostly due to the increase in duties and taxes from Rs 1,551 per ton to 2,492 per ton, a whopping increase of more than 60 percent," said Chairman All Pakistan Cement Manufacturers' Association (APCMA), Sayeed Tariq Saigol in a statement issued here on Wednesday.
He said there was a strong need to cut down duties and taxes to bring down the prices and facilitate consumers which would also help industry to grow as it was playing a vital role in the development of the country. There is a strong growth in the cement despatches albeit a continuous decline in exports over the last few years. The country exported 8.57 million tons of cement in 2012-13 which has gradually dropped about 46 percent to 5.87 million tons in 2015-16. However, the rise in local consumption helped the industry to stay afloat.
"The factors contributing to decline in exports include increase in fuel prices and other input cost, and the most damaging was the barriers erected by the countries we export to, such as anti-dumping duty imposed by South Africa to protect its local industry. Moreover, to discourage imports, the tariff is around 19 percent in India including three percent education cess to promote education in the country, which makes it difficult to compete with other exporting countries which have lesser input cost."
While the world is strengthening barriers on import to promote local industries, it is surprising that some quarters are promoting imports against local industrialization in Pakistan which beats all the economic theories. "Those demanding zero duty on cement imports should see the fate of other energy intensive industries like tiles and tyres after reduction in duties because energy cost in Pakistan is highest in the region," said Chairman APCMA.
In order to meet the massive demand taking place in the country due to various Government and CPEC projects coming up, the industry has gone in for an expansion in its capacity from 44 million tons to 60 million tons within two to three years. In this scenario it would be foolish to even think of importing cement.
Cement is an energy intensive industry and fuel is around 60-70 percent of the total input cost. "The industry not only absorbed the 11.7 percent duty on coal import but the increase in coal price also (from $54 in May 2016 to $105 now), yet they are being charged for fleecing consumers," he added.
Even with higher taxes and input cost, the cement rates in Pakistan are cheaper than neighbouring India (around 4.85 US$ to 5.35 US $) and Sri Lanka (5.84 US$ to 6.14 US$). The strength and quality of Pakistani cement is superior to that of cement produced in neighbouring countries. This is the reason that Pakistan exports cement to almost all its neighbours.
The Chairman said it was good omen for the industry that its capacity utilisation had increased due to domestic demand but the suggestion to remove import duty by some quarters based on current trend would be a short-sighted one. Abolishing the import duty will not only hurt the investments by existing manufacturers and new entrants but would also endanger the livelihood of many workers in the industry. "They should keep in mind that industry growth had already been vulnerable owing to smuggled and under-invoiced import of cement while export declined to its lowest ebb in November 2016," he said, adding cement smuggling from Iran in Balochistan had been causing substantial loss to the national exchequer and the government was urged to take immediate steps to curb this menace.
He urged the government to support the industry by placing anti-dumping duty on Iranian cement and decreasing the taxes to make it more affordable to consumers which would increase the demand of cement and result in capacity enhancement of the industry creating more job opportunities.