Increased FED on cement negative for economy

Would increase illegal import of Iranian cement, reduce consumption locally

LAHORE: Federal budget 2016-17 has increased the federal excise duty on cement from 5% on retail price to Rs1,000 per ton, which will adversely affect the economy, said industry experts.

“The slowdown in construction activities due to increased cement prices will reduce consumption of cement,” they said, adding that it would also increase illegal cross border import of Iranian cement through under-invoicing that would dampen the local industry’s growth.

Cement industry despatched 35.523 million tons of cement during July 2015 to May 2016 period which is 10.55% higher than the corresponding period of last fiscal year.

The growth in cement consumption has been led solely by domestic consumption. According to statistics, the overall domestic despatches in north based mills increased 16.64% to 24.667 million tons and in south based mills by 23.7% to 5.37 million tons.

In total, the domestic demand increased by 17.84% during the eleven months of current fiscal year.

Exports dropped by 17.41% to 5.48 million tons during the first eleven months against 6.64 million tons during same period of last fiscal year.

Cement despatches to domestic markets during the month of May 16 increased 22.78% to 3.06 million tons compared with 2.49 million tons during same month last year.

“The increase in FED on cement is against industry’s demand as we are seeking reduction in taxes to further enhance domestic dispatches,” said the All Pakistan Cement Manufacturers Association (APCMA) spokesman.

Published in The Express Tribune, June 8^th, 2016.

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