Cement makers seek incentives

Published November 11, 2015
APCMA says Pakistani cement industry is losing competitiveness to other countries due to high cost of doing business.—APP/File
APCMA says Pakistani cement industry is losing competitiveness to other countries due to high cost of doing business.—APP/File

KARACHI: The Ministry of Industries and Production (MoIP) was urged to give incentives to help declining cement exports and further take concrete measures to check smuggling of Iranian cement.

In a letter to Secretary MoIP Muhammad Arif Azim, All Pakistan Cement Manufacturers Association (APCMA) Secretary General, Shahzad Ahmed said that Pakistani cement industry was losing its competitiveness to other countries such as Iran, UAE and India due to high cost of doing business.

In 2008-09, the industry exported 10.752 million tonnes cement to different countries and since then exports declined.

To improve exports, the association suggested abolishing GIDC and import duty on coal to reduce energy costs while incentives like freight subsidy or direct subsidy should be given to facilitate exports. Exports by sea should be given additional incentive of five per cent, it suggested.

“These steps would enable the sector to at least maintain its export volume which otherwise had declined by 27pc during first four months of this fiscal year. Cement export volume would be approximately 5.25m tonnes. The decline in exports was absorbed by increase in local dispatches but the industry faced double jeopardy due to foreign cement being dumped in Balochistan in huge quantities,” the letter added.

The association stated that cement production capacity in Pakistan touched 45.620m tonnes per annum.

During the last financial year 2014-15, domestic demand for cement was merely 28.206m tonnes, i.e. 61.82pc capacity utilisation, leaving a surplus unutilised capacity of 17.414 m tonnes available for exports.

Secretary APCMA in the letter said cement industry exported 4.727m tonnes of cement to Afghanistan during the year 2011-12 while cement exports to Afghanistan decreased to 2.873m tonnes during the year 2014-15.

The letter cited ‘no construction activity due to withdrawal of allied forces; economic slowdown due to political instability; adverse law and order situation; influx of cheaper Iranian cement; and increase in capacity of local cement production’ as reasons for decline in exports.

The letter said the industry exported 6.061m tonnes of cement through sea during the year 2008-09 while exports by sea decreased to 3.625m tonnes during the year 2014-15.

Major cement importing countries from Pakistan are South Africa, Mozambique, Sri Lanka and Iraq.

“South Africa imposed anti dumping duty on import of cement from Pakistan. The average duty rate is around 62pc which has eroded the viability of cement exports from Pakistan to South Africa. Furthermore, since last one month the South African currency has devalued by almost 15pc against US dollar,” the letter said.

“Mozambique imposed super tax at the rate of 10pc on import of cement from Pakistan while its currency devalued by 20pc, resulting in a significant drop in exports from Pakistan,” it added.

The letter stated that Sri Lanka reduced the maximum retail price in local markets besides announcing significant duty reduction on import of cement to East Asian countries, while its currency devalued by almost 12pc.

The government of Iraq also imposed 50pc duty on import of cement to Iraq. Due to low cost of production, Iran is capturing the export markets, the letter added.

Published in Dawn, November 11th, 2015

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