Pakistan’s cement producers will be paying close attention to the government’s federal budget for FY23, which is due to be announced today. The industry hopes it will include a number of measures to help boost growth over the next couple of years. Although there has been a revival in construction activity following the easing of lockdowns, cement demand remains sluggish due to inflation and high commodity prices.
In May FY22 the industry declined by 15.9 per cent YoY with total cement dispatches coming in at 3.32Mt, of which domestic consumption saw a 1.6 per cent decline. Exports, meanwhile, tumbled by 77 per cent YoY on the back of rising freight rates, political and economic instability in Afghanistan and a trade ban with India.
Current predictions are that cement sales in Pakistan will decline by around seven per cent YoY in FY23, according to research house Topline Securities. Although the government has set a public Sector Development Programme (PSDP) target of PKR800bn (US$3.95bn) for FY23, only PKR466bn of the PKR900bn announced in FY22 has been spent to date.
The All Pakistan Cement Manufacturers Association (APCMA) has also recommended that the government remove the Federal Excise Duty of PKR75/bag of cement in the coming budget, but given the current revenue targets set by the government, that is not expected to be approved.
One move that could positively impact cement sales is the removal of the Computerised National Identity Card (CNIC) conditions on the sale of commodities, including cement, to unregistered buyers, which the Federation of Pakistan Chambers of Commerce and Industry has proposed. The cement industry has also suggested to the government that the tax holidays for greenfield projects be increased from three to five years.
Published under Cement News