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Definition and scale of sector

  • Commodity materials (cement, timber, etc),
  • Commodity manufactured products (tiles, bricks, sanitary ceramics),
  • Sub assemblies (fire alarms, other safety, mechanical lifting and handling equipment, electronic sensors),
  • Equipment/tooling manufacture/hire,
  • Design/professional services,
  • Construction services

Why the sector was chosen in the West Midlands

  • Significant concentrations of activity especially in north of the region associated with commodity materials and low value added metal goods and ceramics.
  • Need for modernisation.
  • Shift from low value added commodities to higher value added systems, with scope to build on developments in materials such as polymers and recycling.
  • Significant force for change in relation to urban regeneration and the transformation of the image of this region.

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The contribution of cement industry in the economic development of Pakistan - January, 2012

The cement industry in Pakistan has come a long way since independence when the country had less than half a million tones per annum production capacity. Privatization and effective price decontrol in 1991-92 heralded a new era in which the industry had reached a level where surplus production was achieved after meeting local demand in 1997. Due to this positive development it attracted many investors due to cheap and abundant availability of raw materials and increasing local demand for cement consumption also encouraged investment for further expansion of production capacity of their respective units. Currently the cement sector is utilizing only fifty per cent of its installed production capacity of 45 million tones approximately since the local consumption of cement is stagnant for the last several years. Cement sales have been dormant at 22 million tons per year for the last three years
against production capacity of over 43 million tons. The low domestic demand has caused the industry to be unable to absorb the total installed capacity. This is forcing Manufacturers to dispose off their product at loss in the domestic market. So there is a need to explore foreign markets to utilize their full capacity. As of the last quarter of FY 12 only two cement mills that are located near sea port are exporting cement and earning profit of Rs 4 billion while the remaining mills that are unable to export through sea have booked loss of over Rs 10 billion during last fiscal.

A major reason for such a dismal situation is due to curtailed PSDP (Public sector development projects) reduced cement consumption, financing outlay and in flood affected areas. Almost 80 per cent of the cement units are located in the northern part of the country and Afghanistan, with a limited annual cement uptake of 4 million ton, is the only market available to the northern sector to them for exports. Cement manufactured in Pakistan is being exported to Afghanistan and Central Asian States below cost. During FY-11 cement industry exported over 4 million tons to these markets and the industry is optimistic that exports to Afghanistan and Central Asian States shall increase further since these countries are landlocked and Pakistan is the only country which is able to supply cement at competitive rates.

Source: Directorate General of Training and Research (Inland Revenue),




Housing and Construction Industry II - March 2012 

The Sindh Revenue Board (SRB) is losing millions of rupees in sales tax (ST) on services because builders and developers are reluctant to register themselves and start contributing towards the
provincial government.

The difference is over nature of work of builders and developers because they fall under the category of service providers. They are violating the law by not registering themselves as they are not contributing towards sales tax on services, which now falls under
the provincial domain.

The SRB had been arguing that property developers and promoters were levied upon with Federal Excise Duty (FED) from July 1, 2008 and the same was withdrawn on July 1, 2011 through Federal Finance Act 2011. FED on services provided by property developers and promoters was levied under the Federal Excise Act, 2005.

The scope of term “services” for taxation is also listed in Chapter 98 of the First Schedule to the Customs Act, 1969. The national law recognizes the services by property developers, promoters and
contractors as “services,” stated the SRB official.

Source: IAR (Industrial Advisory Reports)



Housing and Construction Industry I - March 2012

Housing is the basic and fundamental human need, but millions are dreaming to have a roof over  their head. Pakistan is facing a severe shortage of housing and the backlog is rapidly rising with increase in population. Estimates show shortage of 8 to 10 million houses.

As against this government has planned to build 1 million houses per annum. Punjab province alone, with a population of 82 million, is facing a shortage of 5 million houses. There is an incremental demand for 7 lac units a year against the annual construction of 1.5 lac units. The demand and supply gap is resulting into serious repercussions or the society as it has changed more than half of Pakistan urban land into squatter settlements and is eating away the agricultural land of the country.

Therefore, the need of the hour is to exploit thehidden potentials of the housing and construction sector. It is a two prong strategy to fight against poverty and raise the standards of peoples’ living. It
not only provides houses but also helps in construction of infrastructure, besides, reviving industrial sector.

Source: IAR (Industrial Advisory Reports)


Cement Industry in Pakistan - November 2009

The profit of cement sector, for the first quarter of the year ended September 2009, dropped 9 percent. After tax aggregate profit of all the units stood at Rs1,030 million for 1QFY10, as against to Rs1,131 million in the 3 months of the previous year.
Cement units located in the north region have shown bigger loss, Rs71 million, compared to Rs39 million last year. Units in the south earned but were sharply reduced by 87 percent to Rs28 million.
The sector faced numerous problems most important was the reduction in price in the domestic market. The 17 cement companies represent 95 percent of the total sector market capitalization.
The zonal analysis excluded Lucky and Dewan from the sample since both had plants in both the zones shows that the gross profit of the cement sector declined by 19.5 percent to Rs6,917 million from Rs8,591 million in the quarter as against the same period of 2009. Gross profit margin shrank by 5.24 percent to 24.18 percent from 29.42 percent.
The analysis shows that the top line was down by 2 percent to Rs28.6 billion for the quarter, from Rs29.2 billion in the same period last year. Retail prices in the local markets averaged Rs318 per bag, representing 1.5 percent decrease. Net export prices also slumped by 14 to 15 percent in US dollar terms. The fall was due to the depreciation of the rupee by 12 percent during the period. The gross margins had contracted by 5.2 percent, in spite of 56 percent drop in international coal prices to $71 per ton in 1QFY10.

Source:  IAR (Industrial Advisory Reports)




Marble Industry - I - December 2008

The marble sector of the country is likely to miss the current fiscal export target of $60 million by at least 25 percent, owing to disruption of electricity, long hours of load shedding and deteriorating law and order situation in the country. These factors are negatively impacting its exports and hindering growth.
All Pakistan Marble Mining Processing Industry and Exporters Association (PMMPIEA) said that the Karachi Electric Supply Corporation (KESC) is carrying out 10 to 12 hours load shedding daily, causing immense financial losses to the sector, which is already suffering due to limited financial resources.

Source:  IAR (Industrial Advisory Reports)  



Marble Industry - II - December 2008

God has bestowed Pakistan with enormous mineral resources including Marble and Onyx, generously available in NWFP and Balochistan provinces. Marble is used for both construction purposes and handicrafts manufacturing, whereas, Onyx which is a transparent type of marble, transparent in the sensse that light can pass through it, and generally used by handicrafts manufacturing industry. High quality Marble and Onyx reserves are found in Pakistan in great quantities and the demand of its products in the export markets is also available, i.e., European Union countries, Central Asian countries etc. make this sector highly attractive for investment.
International tourists are the main customer of products made of Marble and Onyx that has reached an all-time record of $763 million, in 2004. In relative terms, growth over 2003 corresponds to almost 11 percent, the highest and the only double digit percentage recorded since 1980. Growth is common to all regions, but was particularly strong almost in 28 percent in Asia and the Pacific and 18 percent Middle East. Double-digit growth was also registered in the Americas, 11 percent. Africa 8 percent and Europe 5 percent, performed below the world average, but better results in the previous year.

Source: IAR (Industrial Advisory Reports) 




Engineering Industry in Pakistan I - March 2008

Today , Pakistan is capable of producing basic metals from iron ore (a raw material for many industries), complete plants on turn-key basis, construction machinery, material handling equipment, machine tools, electric motors, switchgears, transport equipment, cargo ships, fishing trawlers etc.
Engineering sector accounts for 63 percent share in world trade. Achieving any significant share of the world trade in engineering goods and services will require concerted efforts by Pakistan in gearing up our universities, polytechiniques and factories for the kind of manufacturing process and design capabilities required by the world market. In this context an important step has been taken by the restructuring of the Engineering Development Board (EDB).

Source: IAR (Industrial Advisory Reports)



Engineering Industry in Pakistan II - March 2008

Machine tools are a wide range of machinery employed for cutting, removing or forming the metal to produce components for assembly into a single machine. Termed as strategic sector for any country,it is essential for reproducing the technologies and adoptions of advanced state-of-the-art manufacturing processes. The industry serves as precursor to the process of industrialisation and self-reliance. Machine tools are widely used in capital goods, automotive, consumer-durables, railways, aviation and aerospace, ship-building, defence, electronics, atomic energy and IT-related manufacturing sectors.
Pakistan Machine Tool Factory (PMTF) is a company of State Engineering Corporation, operating under the ministry of industries, production and special initiatives, is the only industrial unit of its kind. It was established by the Pakistan Industrial Development Corporation (PIDC) in 1968, a regional programme for development of machine tools was launched, under the aegis of the Regional Cooperation for Development (RCD), now known as the Economic Cooperation Organisation (ECO).

Source: IAR (Industrial Advisory Reports)



Cement Sector - BOI - December 2007

There are 29 cement production units in the country. Upto May 2007, the total installed cement production capacity is 36.841 million tones. By the end of June 2011, the installed cement production capacity will touch to the level of 49.579 million tonnes.

Due to political instability and lack of allocation of funds for public sector development program, cement industry of Pakistan was in the recession phase had registered an average growth rate of 2.96% for the period from 1990 to 2002. For the period from 2003 to 2007 cement industry of Pakistan had registered an average growth rate of     20%.  The boost in cement sector is because of the rising construction activity in the country, reconstruction activity in Afghanistan and increasing development expenditure by the government.

Source: Pakistan Board of Investment



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