Lahore - All Pakistan Cement Manufacturers (APCMA) Chairman Mohammad Ali Tabba has said the cement industry is going to invest from $700 million to $1 billion in capacity utilisation enhancement.

“Four companies have already announced their plans in this regard,” he said, adding, “Cherat Cement, Attock Cement, DG Khan Cement and Lucky Cement have all announced their plans.”

He said the companies were investing at the time when they were not getting as much support from the government as other sectors get. “Fertilisers and other industries did grow due to relaxation and relief offered by the government, but the cement sector did not get any relief even on LNG from the government,” Tabba lamented.

He said the industry had paid Rs 40 billion in terms of just three direct taxes (excise, sales and income) during the first six months of this financial year, while the figure would touch Rs 90 billion mark at the close of the FY.

“Much is talked about the drop in coal prices and that the cement prices should have been decreased accordingly. Coal price was $80 per ton in 2013-14, which has now come down to $57 per ton now; however, it is just a portion of the cost, while many other cost factors have increased in recent years,” he added.

He further said that GIDC was imposed last year; industrial tax is now 5 percent, which was 4 percent two years back; one time super tax was imposed, and duty on coal import increased from 1 percent to 6 percent.

“This all increased the minimum retail price of cement bags,” said Tabba, adding that these taxes had also increased the cost of doing business in Pakistan.

He added the State Bank of Pakistan should have considered all these taxes and duties before commenting on the cement industry in its latest report. “Yet, the fact remains that cement prices decreased in last 2 to 3 years,” he said.

Tabba further said the cost of doing business was very high in Pakistan, as compared to the region. “Gas prices declined globally, but here in Pakistan the industry is not getting relief,” APCMA chairman said, adding, “Gas prices for domestic consumers and fertiliser industry were lowered by the government, but the other industries are still paying heavily as compared to these.”

He said profit making was not a bad thing. “The cement industry has been accused of profiteering, but the critics forget that businesses have to make money for their shareholders and they also support the national economy by paying taxes and duties. This is being portrayed as a bad thing. This should not be the case,” he concluded.He further said that during the last few years, the profitability of the industry had increased mainly due to increase in local dispatches, as export market was more competitive and profit margin was lower in the exports.

 “Moreover, the industry generates income not solely from the cement sales, but other investments too, which every industry does to manage its money,” Tabba said.

Talking about smuggling from Iran, he said Pakistan Business Council’s report stated that out of total inflows from Iran, only 25 percent import was properly documented, while the rest was under invoiced or smuggled.

“It is said that 0.5 million tonnes to 0.7 million tonnes cement is being smuggled into Pakistan from Iran, annually, and the government is losing around Rs 10 billion to 20 billion in terms of taxes,” Tabba added.

He asked the government to plug this hole as it was not only hurting the industry, but the government as well in terms of revenue collection.

“To keep up with the increasing demand, the industry continues to add production capacity on regular basis, increasing from 8.89 million tonnes in 1990-91 to 45.62 million tonnes in 2015-16,” he concluded.