LAHORE - All Pakistan Cement Manufacturers Association (APCMA) Chairman Sayeed Tariq Saigol has said that cement industry is among the highest contributors to the national exchequer over the last four years and has paid Rs189 billion in taxes.
He said the tax contribution during 2012-13 was Rs39 billion, whereas during 2015-16 the contribution increased more than double ie approximately Rs83 billion. “Though the industry posted growth in these years with dispatches rising to 38.87 million tons from 33.43 million tons in 2012-13, the growth in the government collection is mostly due to the increase in duties and taxes from Rs1,551 per ton to Rs2,492 per ton, a whopping increase of more than 60 percent,” he added.
He said that there is 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 is playing a vital role in the development of the country. There is a strong growth in the cement dispatches albeit a continuous decline in exports over the last few years, he added.
He said 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,” he said.
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, he added.
While the world is strengthening barriers on import to promote local industries, it is surprising that some quarters are promoting imports against local industrialisation in the country which beats all the economic theories, he said.
He said that in order to meet the massive demand taking place in the country due to various government projects and China Pakistan Economic Corridor (CPEC), 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, he added.
He said 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 neighboring India (around $4.85 to $5.35) and Sri Lanka ($5.84 to $6.14). The strength and quality of Pakistani cement is superior to that of cement produced in neighboring countries. This is the reason that Pakistan exports cement to almost all its neighbors.
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 will increase the demand of cement and result in capacity enhancement of the industry creating more job opportunities.