Pakistan's local dispatches hit by tax measures

Pakistan's cement industry is still facing number of challenges in terms of local dispatches and profitability due to stringent tax measures taken in the federal budget 2019-20 to overcome the country's current account deficit and meet the pre-conditionality of the IMF package.

Other factors also hurting cement industry, including the high cost of doing business, interest rate hike, increased in utilities charges and axel load factor.

The government wants to increase its tax revenue base by bringing new tax payers in filer folds and has made it mandatory for submission of Computerised National Identity Card (CNIC) on purchase of more than PKR50,000 (US$312) any kind of commodities, including cement. Reportedly, this has contracted local cement dispatches.

The official representative body of Pakistan cement industry, All Pakistan Cement Manufacturers Association (APCMA), has remained silent for the last four months to share dispatch data with all stakeholders.

According to Sherman Securities, due to the CNIC condition, cement sales have plunged almost 60-70 per cent because majority of the cement dealers are unregistered," said analyst Saqib Hussain of Research House. "Cement demand in Pakistan, which stood at 150,000tpd earlier, has now dropped to 40,000 to 50,000tpd," he told local media.

The analyst added that 60-70 per cent of cement sales in Pakistan were made by unregistered dealers, who were not willing to abide by the new rule of the Federal Board of Revenue (FBR).

Meanwhile, the All Pakistan Cement Dealers Association (APCDA) has said it is in contact with cement companies to resolve the various issues that cropped up following the federal budget to enable the smooth running of all stakeholders' business.