Cement industry pays Rs189 billion intaxes in four years

LAHORE: Cement makers paid Rs189 billion in taxes during the past four years, making the industry one of the biggest contributors to national exchequer, a business leader said on Wednesday.

Sayeed Tariq Saigol, chairman of All Pakistan Cement Manufacturers Association (APCMA) said the tax collection from the industry more than doubled to Rs83 billion in the last fiscal year of 2015/16 from Rs39 billion in 2012/13.

Saigol, in a statement, termed more than 60 percent rise in duties and taxes to 2,492/tonne from Rs1,551/tonne during this period as a main reason behind the growth in tax revenue collection. Cement dispatches also increased to 38.87 million tons from 33.43 million tons in the last four years.

“But, there is a strong need to cut duties and taxes to bring down prices and facilitate consumers, which would also help industry improve its vital role in the development of the country,” he added.

While local consumption is rising, yet cement exports are falling. The country’s exports sharply fell around 46 percent to 5.87 million tons in 2015/16 from 8.57 million tons of cement in 2012/13. 

Saigol said exports are on the downward trend due to increase in fuel prices and fuel cost. South Africa also slapped anti-dumping duty on Pakistan’s cement, while India has also high tax incidence – as much as 19 percent. 

“While the world is strengthening barriers on import to promote local industries, it is surprising that some quarters are promoting imports against local industrialisation,” Saigol said. “Those demanding zero duty on cement imports should see the fate of other energy intensive industries like tiles and tyres as a result of reduction in duties.”

Cement is an energy-intensive product and fuel accounts for around 60 to 70 percent of the total input cost.  APCMA chief said the local industry planned an expansion in production capacity to 60 million tons from 44 million tons within the next two to three years. “In this scenario it would be foolish to even think of importing cement.”

In Pakistan, cement prices are cheaper than neighbouring India (around $4.85 to $5.35) and Sri Lanka ($5.84 to $6.14). 

Saigol said abolishing the import duty will hurt investments by existing manufacturers and new entrants as well as endanger the livelihood of many workers in the industry.  “Industry growth is already vulnerable to smuggled and under-invoiced import of cement,” he said. “Cement smuggling from Iran and Balochistan has been causing substantial losses to national exchequer and the government should take immediate steps to curb this menace.” Government should also support the industry by placing anti-dumping duty on Iranian cement, he added.