Pakistani:Cement export reduces by 27 percent in July-October

Byszheng

Updated Fri, 13 Nov 2015 10:50:12 GMT

Due to high cost of doing business in Pakistan, Pakistani cement industry is losing competitiveness to other countries such as Iran, UAE and India.

All Pakistan Cement Manufacturers Association (APCMA) has appealed to Ministry of Industries and Production (MoIP) to give protection to the sector to increase its exports that are facing decline since 2008-09 - due to increase in smuggling of Iranian cement.

APCMA Secretary General Shahzad Ahmed in a letter to MoIP Secretary Muhammad Arif Azim drew his attention towards the gradual decline in the exports of the sector to different countries while the sector continues to face challenge of Iranian cement's smuggling also. 'In order to improve exports, we suggest the abolishment of import duty on coal to reduce the energy cost. Also, GIDC should be abolished, while incentives like freight subsidy or direct subsidy should be given to facilitate exports, especially the exports by sea should be given additional incentive of 5 percent," he said in the letter.

The APCMA secretary said that it would enable the sector to at least maintain its export volume which otherwise has declined by 27 percent during first four months of current fiscal year that means the cement export volume would be approximately 5.25 million tonnes. He said 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.

He said cement production capacity in Pakistan has touched 45.620 million tonnes per annum, and out of this capacity, 81 percent is situated in the North and 19 percent in the South. "During the last financial year, domestic demand for cement was merely 28.206 million tonnes - 61.82 percent capacity utilisation - leaving surplus unutilised capacity of 17.414 million tonnes available for exports,' he added.

Though the cement industry is trying best to export the surplus capacity to neighbouring regional and African markets, the exports are declining continuously, he maintained. "During the year 2008-2009, cement industry of Pakistan exported 10.752 million tonnes of cement to different countries and thereafter, there is a significant decline in export of cement,' he regretted. He said cement industry exported 4.727 million tonnes of cement to Afghanistan during the year 2011-2012, while cement exports to Afghanistan decreased to 2.873 million tonnes during the year 2014-15.

"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 are the main reasons behind decrease in export, he added. Similarly, he said, cement industry exported 6.061 million tonnes of cement through sea during the year 2008-2009, while cement exports by sea decreased to 3.625 million tonnes during the year 2014-15 with major cement importing countries from Pakistan are South Africa, Mozambique, Sri Lanka and Iraq.

"One of the main reasons of this decline is that the government of South Africa has imposed anti-dumping duty on import of cement from Pakistan. The average duty rate is around 62 percent, 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 15 percent against US dollar,' added APCMA secretary.

"The government of Mozambique imposed super tax at the rate of 10 percent on import of cement from Pakistan as well as their currency has devalued by 20 percent, resultantly significant drop in exports from Pakistan as our currency has not been devalued in tandem, he highlighted.

Moreover, he said the new government of Sri Lanka has reduced the maximum retail price in local markets, besides announcing significant duty reduction on import of cement to East Asian countries, while their currency has devalued by almost 12 percent. "The government of Iraq has also imposed 50 percent duty on import of cement to Iraq. Last but not the least, due to low cost of production, Iran is capturing the export markets," he revealed.

He appealed to the ministry to help the industry through the measures the industry suggested as decline in the exports and increase in the non-utilisation of the surplus capacity would knockdown the sector.