Cement industry to add $1 billion to bolster growth

KARACHI: Cement manufacturers will invest around $1 billion to increase production capacity over the next three years in anticipation of high demand from development projects under the public sector development programme, China-Pakistan Economic Corridor and housing schemes, an industry official said on Tuesday.    

Speaking to media, All Pakistan Cement Manufacturers (APCMA) Chairman Mohammad Ali Tabba said, “Besides, Cherat, Attock, DG Khan and Lucky Cement, more players are looking forward to expand production capacity in the next two to three years.”

The last significant increase in the industry capacity was made in 2008-09, when it increased from 17.91 million tons to 42.28 million tons, whereas the current capacity stands at 45.62 million tons.

He said the companies are investing at a time when they are not getting any government support unlike other sectors. “Fertilisers and other industries did grow due to relaxation and relief from the government, but the cement sector did not get any relief even on LNG from the government,” Tabba informed.

He said the industry paid Rs40 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 Rs90 billion mark at the close of the current fiscal year.

He said the GIDC was imposed last year; industrial tax now five percent was four percent two years back; one time super tax was imposed; and duty on coal import increased from one to six percent.

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

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

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,” he added.

Moreover, the income of the industry is not solely from cement sales, but other investments too, which every industry does to manage its money.