The All Pakistan Cement Manufacturers Association (APCMA), in its budget proposal, has recommended a reduction in federal excise duty (FED) to be stepped to zero to alleviate the cost pressure on locally-manufactured cement, which is facing competition from Iranian imports.

The Daily Times reports that in the budget proposal sent to Federal Board of Revenue (FBR), APCMA Chairman Muhammad Ali Tabba stated that the cement industry is subject to FED at the rate of five per cent of retail price and general sales tax (GST) at the rate of 17 per cent of maximum retail price. These taxes come to around PKR100/bag (US$0.95).

"This incidence of high taxation encourages evasion and negatively impacts consumption. The abolishment of excise duty not only eliminates tax evasion but also enhances cement consumption at reduced price," he added.

Moreover, the chairman said that Iranian cement is flooding the border areas of Balochistan and sold at lower prices as compared to locally-produced cement. "This phenomenon is detrimental for local manufacturers and in the longer run can challenge the survival of local industry. Additional regulatory duty should be immediately imposed on imports of Iranian cement and some prior approval mechanism from the government should be in place regarding quality of Iranian cement imported in Pakistan,"  he requested.

In addition, the recent increase in duty on import of coal from one to six per cent has adversely hit the local manufacturers and has drastically increased cost of doing business," the APCMA chairman added.

He requested that this latest increase in import duty on coal should be reduced to zero per cent, as this would keep open the option of using coal as alternative source of energy. "The government had enacted the Gas Infrastructural Development Act of 2011, whereby the government charged a cess to all gas consumers except those of the domestic sector," he added.