The All Pakistan Cement Manufacturers Association has proposed a number of incentives to facilitate the industry ahead of tomorrow’s 2014-15 Budget announcement.

Among the budget proposals from the APCMA, it has called on the government to abolish the Federal Excise Duty on cement (currently FED400/t) in a phased manner, and reduce general sales tax (GST) from 17 to 12.5 per cent.

Officials from the country’s Federal Board of Revenue (FBR) stated that the government promised cement manufacturers that FED would be gradually lowered and eventually phased out within a time frame of approximately three years. The FED on cement was decreased in FY11-12 from PKR750/t to PKR500/t and duty was slashed from PKR500/t to PKR400/t in FY12- 13. However, reports suggest that FED is expected to increase by around PKR100/t in the FY14 – 15 budget due to a shortfall in the registered collection of tax revenue. This may result in a rise in the price of cement by some PKR5 per bag.

The APCMA is also calling on the government to reduce prevalent duties on alternative fuels. The initiative will enhance its competitiveness in the international markets, the APCMA argues. The cement industry has already requested to eliminate the duty rate on non-calcined petcoke (HS Code 2713.1100) and shredded rubber scraps from the current five and 10 per cent ad valorem. These substitutes will allow the cement manufacturers to reduce energy costs, allowing them to export its surplus capacity, an APCMA official explained.

It has been suggested that the FBR has proposed a 1-2.5 per cent special excise duty (SED) on the import of raw materials, including various fuel sources such as coal. However, industry commentators state that the chances of the government imposing the SED tax seem less likely given the number of coal-fired power projects undertaken by the present government.

The export industry, mainly textiles, has proposed the government allow a 3-5  per cent rebate on export revenue to offset the impact of currency appreciation. Although the chances are small, if a similar rebate is approved for exporters across the industries, it would have a direct impact on cement exporters.