Over the past few years, Pakistan’s construction industry has seen significant growth on the back of rapid urbanisation, population growth, improved middle-class household income, spike in public development spending, increase in payments from Pakistanis working abroad and so on.
The industry’s growth has, in fact, become more pronounced in the last couple of years with this sector rising by a handsome nine per cent in 2016/2017 and 14pc in 2015/2016.
The construction ‘boom’ in the country has triggered massive growth in allied industries like cement, glass, steel, construction chemicals, etc.
The construction ‘boom’ in the country has triggered massive growth in allied industries like cement, glass, steel, construction chemicals
Many expect the completion of power and transport projects under the multi-billion-dollar China Pakistan Economic Corridor (CPEC) initiative to revive existing factories and trigger fresh investment in the country’s manufacturing industry, further boosting housing, commercial and industrial construction.
Little wonder then that local and foreign companies operating in the construction sector, like cement, steel, construction chemicals and so on, have already started investing in new manufacturing facilities to raise their production capacity in order to meet growing demand for their products in the medium to long term.
Sika Pakistan, a subsidiary of Sika Switzerland AG, an over 100-year-old global manufacturer of specialty construction chemicals, too saw the opportunity and invested in Pakistan’s first ever seven million Swiss franc in a construction chemicals manufacturing facility at the Sundar Industrial Estate near Lahore.
The new plant has already started commercial production on an eight hour, single-shift a day, basis and will formally be inaugurated early next month.
“We feel Pakistan is an excellent market with more than 200m people. Growing urbanisation, improving per capita income and standard of living in the country is pushing the demand for good quality products.
“There is a huge potential for chemical manufacturing companies as their use has rapidly increased in recent years,” Sika Pakistan Chief Executive Officer Ahmed Naveed Chaudhry said in interview last week.
“Pakistan is a very lucrative market… has never been a bad market for foreign companies; I’ve never seen any foreign firm exiting Pakistan because of financial losses. There could be several factors forcing a firm to quit this market but not financial problems.”
Construction chemicals are additives that are used with concrete, cement and other construction materials to provide additional durability and workability to structures. A booming construction industry — the government estimates construction contributes 2.4pc to the GDP — coupled with complex infrastructural needs is fuelling growth of construction chemicals across the globe.
“The demand for quality chemicals is there. The problem is that consumers lack any knowledge about the chemicals and how quality products can help them cut their construction and maintenance costs, and eventually save them some money,” Ahmed argued.
“Quality products are usually considered expensive here and contractors try to save on their costs by using low quality chemicals at the expense of end consumers. Some chemicals may cost more than the low quality products available in the market but at the end of the day their use helps to cut costs on maintenance in a big way.”
The fully-automated Sika facility is the country’s first LEED (Leadership in Energy and Environmental Design)gold certified chemical manufacturing factory. Initially, the plant will make 60 tonne powder chemicals and 80 tonne liquid chemicals per day on a single shift basis.
“We are expecting the output to double by January next year. Two years from now we’re hoping to run the plant on a three shifts a day basis to utilise 100pc manufacturing capacity, and looking forward to expand capacity further as the market grows.”
Ahmed said the establishment of a manufacturing plant in Pakistan will help the company bring, modern technology to this country, improve the quality of construction as well as keep its production and consumer cost low in the local market.
“The plant will provide 150 direct jobs besides creating several hundred indirect employment opportunities. The increase in capacity utilisation will create more jobs.
“Although energy cost in Pakistan is very high, our cost of production here is still lower than in China because of labour wages. Besides, the environment-friendly, efficient technology and virtually zero per cent wastage of raw materials will help us save three per cent on our production costs.
Published in Dawn, The Business and Finance Weekly, October 23rd, 2017