TEHRAN: Increase in Federal Excise Duty on cement, announced in the federal budget 2016-17, will further increase illegal entry of Iranian cement into Pakistan through under-invoicing and smuggling, dampening the local industry’s growth besides reducing the contribution to the national exchequer. Industry experts have said that increase in excise duty on cement has caused the commodity’s retail price to go up to Rs1000 per ton, adversely affecting the economy and slowing down construction activities due to increased cement prices.
The All Pakistan Cement Manufacturers Association (APCMA) spokesman said on Tuesday that raise in FED on cement was against the industry’s demand, as it was seeking some reduction in taxes to further enhance domestic dispatches. “The proposed change will encourage the illegal trade in the form of smuggling of cement. The impact of this increase calculates to Rs34 per bag,” he added.
He appealed to the government to review its decision, as this will not only affect the consumers but also the industry. “We fear that due to high cement prices, the consumption will come down,” he apprehended. Regarding cement exports in May, he said that constantly falling exports were adding to the industry’s woes.“Apart from exports to India, which increased by 33.36 percent, exports to Afghanistan and other destinations declined by 10.34 and 32.39 percent respectively in the first 11 months of this fiscal year,” he informed.
“Exports to other destinations declined by whopping 32.39 percent due to economic slowdown in countries to which Pakistan has been exporting,” he said, and added, “The government should provide incentives to the industry to take back the Afghan market and earn precious foreign exchange.
According to the latest data, issued by APCMA on Tuesday, cement industry dispatched 35.523 million tonnes of cement between July 2015 and May 2016, which is 10.55 percent higher than what it was in the corresponding period last fiscal year. The growth in cement consumption has been led solely by domestic industry. Statistics show that the overall domestic dispatches from north based mills increased by 16.64 percent to reach 24.667 million of tonnes, and from south based mills by 23.7 percent to reach 5.37 million of tonnes. In total, the domestic demand increased by 17.84 percent during the 11 months of current fiscal year.
Quantitatively, total domestic dispatches were 30.03 million tonnes from July 15 to May 16, compared to 25.49 million of tonnes during the same period last fiscal year, while exports dropped by 17.41 percent to 5.48 million of tonnes during the first eleven months of the current fiscal year against 6.64 million of tonnes during the same period of last fiscal year. Cement despatches to domestic markets during the month of May 16 increased by 22.78 percent to 3.06 Million Tons compared with 2.49 Million Tons during same month last year. Exports during May 16 were 558,000 Tons against 560,000 Tons during May, 15.
Total despatches during May, 16 were 3. 622 Million Tons compared to 3. 056 Million Tons during same month last year showing increase of 18. 52 percent. Zone wise figures show that the domestic despatches by mills located in North were 2.5 million tons compared with despatches of 2. 04 million tons during same month last fiscal depicting a growth of 22.31 percent. In South the domestic despatches were 563,942 tons compared with despatches of 451,521 tons in May 2015 depicting a growth of 24.9 percent.
