Ayesha Saba

Pakistan’s cement sales rose 6.82% in February 2025, sparking calls for government support to sustain growth. Analysts suggest tax rebates and subsidies to boost demand and address the industry challenges.

Talking to WealthPK, Mehmood Khalid, former project director of Center of Excellence-CPEC and head of Fiscal and Tax Policy section at the Pakistan Institute of Development Economics (PIDE), said the cement industry had long been recognized as a critical driver of economic activity, contributing to infrastructure development, job creation, and growth of allied sectors such as construction, transportation, and mining.

However, despite its importance, the sector is facing persistent challenges, including high taxation, energy costs, and insufficient demand. He expressed hope that the government will introduce industry-friendly measures in the upcoming budget to support growth and enhance capacity utilization. By lowering taxes, the government can help reduce the production costs, enabling manufacturers to offer more competitive prices – domestically and internationally.

He argued that one of the primary hurdles facing the cement industry was underutilization of its installed capacity. Despite having a total production capacity exceeding 70 million tons per year, the actual utilization remains significantly lower due to the reduced construction activity and high borrowing costs. According to him, a key reason behind this is the decline in large-scale development projects and the private sector’s reluctance to invest in real estate due to the high interest rates.

“The government must prioritize public sector infrastructure spending and introduce incentives for private sector builders to stimulate demand,” he said. At present, high taxation increases the retail price of cement, making construction more expensive. A cut in FED or GST on cement would not only benefit the construction sector but also lead to higher tax revenues through increased sales volume. He further noted that the lower cement prices could revive the stalled housing projects and boost employment in the sector.

“With the global energy prices fluctuating, local manufacturers struggle to remain competitive. Government support in shape of energy subsidies or alternative energy incentives could be a game-changer,” remarked Mehmood. The upcoming federal budget presents an opportunity for the government to address these concerns and unlock the full potential of the cement industry. Stakeholders believe that well-structured policies can help boost the local demand, increase exports, and ensure sustainable growth, he added.

According to the data released by the All Pakistan Cement Manufacturers Association (APCMA), the local cement sales by the industry during February 2025 were 3.065 million tons compared to 2.869 million tons in Feb 2024, showing a marginal increase of 6.82 percent. The domestic cement sales, after many months of negative momentum, showed a month-over-month (MoM) increase by 11.64 percent during January 2025, failing to pick up as expected during February 2025.

Export despatches, however, increased by 34.30%, as the volumes jumped from 395,935 tons in Feb 24 to 531,736 tons in Feb 25. The total cement dispatches during Feb 25 were 3.596 million tons against 3.265 million tons despatched during the same month of the last fiscal year, showing an increase of 10.15 percent.

Credit: INP-WealthPk