Tile industry fears for survival after gas price hike

KARACHI: Ceramic tile makers on Wednesday pleaded with the government to

withdraw a recent increase in the gas price, saying it

would render the domestic

industry uncompetitive in local and global markets, leading to thousands of jobs losses.

“Tile industry is in the revival phase and it is expecting relief measures against the issues like rising energy prices, high tax rates, extremely low import trade price of tiles sourced from China, and a massive inflow of smuggled tiles from Iran,” a spokesman of All Pakistan Ceramic Tiles Manufacturers Association (APCTMA) said in a statement.

The APCTMA official said the gas price for general industrial and captive power plants had been increased by 30 percent from Rs600 to Rs780/mmbtu, which

would have a negative impact on direct and indirect employment of over 50,000 workers in the local tiles industry.

“It will also stall the growth in construction sector which is booming on the back of rapid urbanisation and other construction projects like large malls, office

buildings, and apartments, across the country. It will make all the efforts of employment generation an exercise in futility,” the official said.

He warned that this hike would not only bring all the expansion and investment projects of the industry to a grinding halt but would also hurt the transfer of technology, creation of skilled labour base, and vendor industry in the country.

“The industry intends to invest in capacity enhancement to further increase its production in order to meet the rising demand given the government supports the local industry,” the All Pakistan Ceramic Tiles Manufacturers Association official said.

It is pertinent to mention that the local tile industry is producing quality products that are comparable to top global tile manufacturers and hence it provides a big opportunity for employment generation.

Despite losses incurred by local manufacturers as declared in the prior financial statements of public listed companies, the local industry is continuously contributing to the national exchequer in the form of sales tax, import duties and other taxes.

The spokesman further said the industry had already been hit by a huge influx of smuggled tiles and imports at lower valuation, which were estimated to have captured over 40 percent of the country’s tile market worth nearly Rs80 billion, while domestic manufacturers continue to suffer owing to their higher production costs and uneven competition from cheaper imported products.

“Increase in gas prices will badly hamper the sales and profitability of local tile industry and will further intensify the share of imported tiles,” he added.

The official went on to say the local tile industry was one of the segments of import substitution and its development would stimulate the economy by job creation and uplifting the construction sector.

“The government is urged to decrease the gas price and helping the tile industry compete not only with foreign tiles in the local market but also explore export avenues overseas to earn precious foreign exchange creating thousands of new jobs in the process,” the official said.