Karachi, August 4, 2024 – The cement industry in Pakistan is grappling with significant challenges as domestic despatches have declined for the eleventh consecutive month, primarily due to heavy taxation and rising input costs. According to the All Pakistan Cement Manufacturers Association (APCMA), this persistent downturn is a major concern for the industry.
The APCMA has been vocal about the adverse effects of the current taxation policies on the cement sector. Industry representatives are urging the government to reconsider its approach, arguing that the heavy tax burden is stifling growth and innovation. An APCMA spokesperson highlighted the need for a more balanced approach to documentation and taxation. They emphasized that forcing small retailers to comply with complex sales tax regulations and point-of-sale systems is unlikely to boost revenue. This is particularly relevant since cement is categorized as a third-schedule item, meaning the entire sales tax is already collected at the manufacturing stage.
Data from July 2024 indicates a 6.81% decrease in cement despatches compared to the same period last year, with total despatches amounting to 3.010 million tons. Domestic sales saw an even more pronounced decline of 11.41%, dropping from 2.780 million tons in July 2023 to 2.463 million tons in July 2024.
Despite the challenges in the domestic market, the export sector showed some resilience. Export despatches increased by 21.65%, from 449,792 tons in July 2023 to 547,162 tons in July 2024. This growth in exports provided some relief to the struggling industry.
A regional analysis of the data reveals contrasting trends between north-based and south-based cement mills. South-based mills experienced an 8.20% increase in overall despatches, while north-based mills saw a decline of 11.40%. The disparity extended to domestic sales, with south-based mills experiencing a 13.62% drop and north-based mills witnessing an 11.01% decrease.
Export performance also varied significantly between regions. North-based mills faced an 18.79% decline in export despatches, whereas south-based mills registered a substantial 36.67% increase. This mixed performance highlights the uneven impact of external market conditions and regional dynamics on the industry.
The cement industry is now calling for immediate government intervention to address the challenges posed by high taxes and increased input costs. Industry leaders believe that a supportive policy environment is crucial for the sector’s recovery and its ability to contribute effectively to the overall economy. They argue that reducing the tax burden and creating a more conducive business environment will not only help stabilize the industry but also promote sustainable growth in the long term.
The APCMA continues to advocate for policies that foster innovation, competitiveness, and growth in the cement sector. As the industry navigates through these turbulent times, the role of government support and strategic policy adjustments will be pivotal in shaping its future trajectory.
