The Pakistan government has released its economic survey for FY19-20 on the eve of the Federal Budget FY20-21. The survey reviews government incentives for the cement industry, accounts of dispatches, export and mining lease issues.
 
The government has labelled the construction and cement industry a significant source of growth and investment in the future. It has already introduced an incentive package for the construction industry in April 2020, anticipating to help increase local cement consumption. The package includes an amnesty scheme, tax exemptions and a PKR30bn (US$182.2m) subsidy for Naya Pakistan. Furthermore, the construction sector was given industry status.
 
To promote investment and boost the trust of investors, after almost five years the Punjab Mines & Minerals Department has lifted a ban on the grant/renewal of mining concessions to the cement sector. Currently, around 26 applications for mining concessions for cement raw materials are being processed.
 
Similarly, Balochistan province has large deposits of limestone, gypsum and coal, and investment opportunities for the installation of cement factories are available. Seven applications for exploration and mining leases are currently being processed by the Director General of Mines & Minerals' office in Quetta. After completion of the study, the licences are expected to be granted.
 
Dispatches/export of cement
Pakistan’s cement industry has posted healthy growth during the first nine months of the current fiscal year, July 2019 – March 2020. Cement sector performance has been backed by increased exports of mainly clinker, which rose by 100 per cent during the period. Domestic demand for cement picked up the pace as the government increased development expenditures, while improved remittances inflow may have uplifted private construction activities.
 
COVID-19, as expected, had an impact on the domestic consumption of cement, which declined by 16.7 per cent in March 2020. Exports also grew at the slowest pace of 5.3 per cent, as global markets are equally under pressure due to the pandemic. Total dispatches (local and shipping) in March 2020 declined by 14.3 per cent to 3.72Mt from 4.34Mt in March 2019. The pressure was more substantial in the domestic market, where the uptake fell to 3.214Mt in March 2020 from 3.858Mt in the same month last year. However, exports inched up from 0.482Mt in March 2019 to 0.507Mt in March 2020.
 
Regional performance
Domestic consumption in the northern part of the country declined by 10.5 per cent, reaching only 2.749Mt in March 2020 compared with 3.071Mt in the same month last year. Exports from the northern grinding centres also declined by 18.9 per cent to 0.107Mt in March 2020 from 0.132Mt in March 2019.
 
Domestic dispatches from the grinding units in southern Pakistan fell by 41 per cent to 0.464Mt in March 2020, against 0.787Mt in March 2019. Meanwhile, exports from the south increased by 14.3 per cent, from 0.351Mt in March 2019 to 0.401Mt in March 2020.
 
Cumulative dispatches
Total local dispatches during the 9MFY19-20 increased by 3.8 per cent YoY to 30.588Mt from 29.461Mt. Total exports rose to 6.446Mt, a 25.6 per cent increase from 5.131Mt during the same period last year.
 
The northern region entirely drove the growth in local sales while the south contributed to export performance. According to the APCMA, local dispatches from the north increased by 12.1 per cent, while the southern region showed a decline of 26.8 per cent during July. Exports from the south increased while northern exports saw a 3.7 per cent decline during the period.
 
The export of cement witnessed a decline of 5.1 per cent in value, while quantity increased by 7.3 per cent during the period under review. However, Pakistani cement exports this year had become more diverse in terms of market access than last year, when India was the principal importer of Pakistani Portland cement, importing one-fourth of Pakistan's cement export volumes.