Bud­get pro­pos­als to dampen ce­ment in­dus­try’s growth

Pakistan Observer - - ECONOMY WATCH -

SALIM AHMED LA­HORE—Fed­eral bud­get 2016-17 has in­creased the fed­eral ex­cise duty on ce­ment from 5 per­cent on retail price to Rs1,000 per ton. This will neg­a­tively af­fect the econ­omy as the slow­down in con­struc­tion ac­tiv­i­ties due to in­creased ce­ment prices will re­duce the con­sump­tion of ce­ment. This will fur­ther in­crease il­le­gal cross bor­der im­ports of Ira­nian ce­ment through un­der in­voic­ing and smug­gling that will dampen the lo­cal in­dus­try’s growth and will re­duce the con­tri­bu­tion to na­tional ex­che­quer. Ce­ment in­dus­try despatched 35.523 mil­lion tons of ce­ment dur­ing July 2015 to May 2016 pe­riod, which is 10.55 per­cent higher than the cor­re­spond­ing pe­riod of last fis­cal year.

The growth in ce­ment con­sump­tion has been led solely by do­mes­tic con­sump­tion. Sta­tis­tics shows that the over­all do­mes­tic des­patches in north based mills in­creased by 16.64 per cent to 24.667 mil­lion tons and in south based mills by 23.7 per cent to 5.37 mil­lion tons. In to­tal, the do­mes­tic de­mand in­creased by 17.84 per­cent dur­ing the eleven months of cur­rent fis­cal year. Quan- ti­ta­tively, to­tal do­mes­tic des­patches were 30.03 mil­lion tons from July 15 to May 16 com­pared to 25.49 mil­lion tons dur­ing same pe­riod of last fis­cal year while ex­ports dropped by 17.41 per cent to 5.48 mil­lion tons dur­ing the first eleven months of cur­rent fis­cal against 6.64 mil­lion Tons dur­ing same pe­riod of last fis­cal year. Ce­ment des­patches to do­mes­tic mar­kets dur­ing the month of May 16 in­creased by 22.78 per cent 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 per cent. 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 per cent.

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