Cement distribution sector: LCCI urges FBR to withdraw SROs

LAHORE: President of the Lahore Chamber of Commerce & Industry Mian Abuzar Shad has urged the Federal Board of Revenue to withdraw recently issued SROs which have triggered serious concerns within the cement distribution sector.

In a letter to Prime Minister Shehbaz Sharif, the LCCI president sought immediate intervention in the matter. The letter was written after a detailed meeting between the LCCI president and a delegation from the All Pakistan Cement Distributors Association, during which the implications of SRO 578(I)/2025 and SRO 709(I)/2025 were thoroughly discussed.

LCCI Senior Vice President Engineer Khalid Usman, former president Muhammad Ali Mian, Chairman All Pakistan Cement Distributors Association Sheikh Abdul Majeed, Chaudhry Muhammad Muneer, Chaudhry Sajis, Arif Khan, Nauman Ahmad and other members of the association were present on the occasion.

Mian Abuzar Shad said that SRO 578(I)/2025, issued on April 8, 2025, mandates that all business transactions must be made through bank channels along with detailed buyer information. He pointed out that this policy is impractical in the current economic landscape, as a significant portion of cement sales—approximately 40 percent — are made to walk-in customers for whom cheque payments are not reliable due to a high bounce rate and lack of effective legal recourse.

He further emphasized that the remaining 60 percent of sales typically involve cash recoveries from wholesalers and retailers, especially in rural areas where banking access remains severely limited. The implementation of this SRO, he warned, would not only disrupt the documented supply chain but could also force many compliant businesses into non-compliance, leading to closure and financial losses due to input tax disallowances caused by bounced cheques.

Similarly, he addressed the concerns surrounding SRO 709(I)/2025, dated April 22, 2025, which requires system integration with FBR’s digital platform. Mian Abuzar Shad stressed that this policy fails to consider the nature of cement as a third schedule product that is already taxed at the maximum retail price (MRP) at the manufacturing stage. Distributors, he noted, have minimal control over downstream documentation in the supply chain and derive no added value or bargaining power from this integration, while the compliance burden is disproportionately high. Furthermore, there is no significant revenue gain for the FBR from this enforcement.

The LCCI president stated that these SROs reflect a disconnect from ground realities and that a one-size-fits-all compliance model cannot be applied to essential commodity sectors like cement. He emphasized that such policies risk pushing the formal distribution sector into informality, which could trigger artificial cement shortages, disrupt construction activities and ultimately harm the national GDP growth.

Mian Abuzar Shad appealed to the Prime Minister Shahbaz Sharif for the immediate suspension of both SROs as they pertain to cement distributors, wholesalers and retailers. He recommended that cement manufacturers should be permitted to sell only to active and tax-registered buyers, thus preserving documentation without disrupting the market.

He said that the LCCI fully supports the concerns of the All Pakistan Cement Distributors Association andsought the prime minister’s intervention in directing the FBR to engage with relevant stakeholders. Mian Abuzar Shad also proposed that special provisions be established for essential commodity supply chains and urged for immediate consultations between the Prime Minister’s Office, the FBR and industry representatives to develop practical, workable solutions.

Copyright Business Recorder, 2025