ISLAMABAD: A significant growth in cement dispatches has been recorded due to its increased consumption by several ongoing hydro power projects, including Suki Kinari, Dasu and Karoot power projects and construction activities in private sector projects.
Pakistan Bureau of Statistics (PBS) latest data of Large Scale Manufacturing Index shows that during July-October 2020-21 as opposed to same period of last fiscal year, cement witnessed 23.51 percent growth - 16.43 million tonnes compared to 13.303 million tonnes for the same period a year before,
When contacted, a senior engineer of Wapda told Business Recorder that currently several hydro power projects including Suki Kinari, Dasu and Karoot were under construction and cement consumption on these projects spillways work, power houses and pillars filling has increased significantly. He further said use of cement has increased due to excavation and general work at Mohmand Dam and since last November, some 25,000 tonnes of cement has been used at the rate of 2,000 tonnes per month. At this stage iron and steel work is already completed.
Sources said that a delegation of All Pakistan Builder and Development Association (ABAD) recently informed the prime minister during National Coordination Committee on Housing Development that 74 projects have been approved in Sindh with an estimated investment of Rs 28 billion. These projects, the premier was further informed would create economic activities of Rs 55 billion in the country.
When contacted by Business Recorder, Arif Yousaf Jeeva, former Chairman Association of Builder and Developers Association (ABAD) stated that, “there was an increase in demand of cement dispatches subsequent to construction activities especially in three major cities namely Islamabad, Karachi and Lahore by the private sector.” However, the government has yet to start construction of five (5) million houses, he added.
Ministry of Finance stated that in order to mitigate the negative impact of COVID-19 on daily wagers, the government announced a special package for construction sector, which includes amnesty scheme, tax exemptions and subsidy of Rs. 30 billion for Naya Pakistan. The Ministry further stated that cement dispatches surged by 16.8 percent to 23.84 million tonnes during July-November fiscal year 2021 (20.4 million tonnes last year). The month-on month average growth also remained positive. The yearly comparison showed that cement production in July 2021 was 37.8 percent high as opposed to negative 1.49 in the comparable period of 2019.
The finance ministry stated during July-September 2021, allied industry of construction especially non-metallic mineral products posted a growth of 22.17 percent. Though on average year-on-year, iron and steel products witnessed a negative growth of 8.06 percent during July-September fiscal year 2021 but when compared to negative 17.04 percent growth in same period last year, it indicates its performance is improving.
The Finance Division response on the progress of construction sector and PM’s comments that this sector will boost the economy.
The Division stated that some sections of media are of the view that the effects will only be short term and that overall underemployment is not improving.
At the outset, it is important to mention that the present government is well aware of the fact that the construction industry has a great potential to uplift the economy. Moreover, the sector has the great ability to absorb higher number of skilled and unskilled workers. During the second half of FY2020, Pakistan’s economy witnessed a significant challenge due to COVID-19 outbreak, as a result of which there were lockdown across the country. In an effort to put the economy on the path of recovery in the post COVID period, the government took major initiatives and announced relief measures for various sectors of the economy.
In particular, government opened the labour intensive construction sector to mitigate the negative impact of COVID-19 on daily workers and announced a special package which includes amnesty scheme, tax exemptions and subsidy of Rs. 33 billion for Naya Pakistan. This Rs. 33 billion mark-up subsidies for payment of affordable housing finance is for a period of 10 years. For this purpose, State Bank and government of Pakistan have signed a memorandum of understanding.
Efforts to boost construction sector have started to pay back as can be seen from cement dispatches data published by APCMA:
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Total Cement Dispatches Growth %
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MoM (month on month) YoY (year on year)
FY2020 FY2021 FY2020 FY2021
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Jul -1.27 4.65 -1.48 37.8
Aug -4.60 -27.24 -3.18 5.04
Sep 27.52 48.10 11.60 21.9
Oct 16.55 9.92 9.11 15.06
Nov -13.10 -21.29 10.15 4.19
Average 5.02 2.83 5.24 16.80
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Source: All Pakistan Cement Manufacturer Association
Cement dispatches data which is available monthly, shown that total cement dispatches in the country surged by 16.8 percent to 23.84 Million tonnes during Jul-Nov FY2021 (20.4 Million tonnes last year). Pakistan Bureau of Statistics (PBS) published data for Large Scale Manufacturing (LSM) with a lag of two months. During Jul-Oct FY2021, allied industry of construction especially Non-metallic Mineral Products posted a growth of 22.8 percent which was 0.4 percent in the same period last year. The ongoing performance of construction sector shows that the diligent policies adopted by the Government to uplift the sector are bringing fruits.
Housing and construction industry has profound significance in long-term development of a country. More than 40 industries and 70 percent of skilled labour force are associated with it. Thus the growth in construction sector will provide great impetus to overall economic activity along with providing more job opportunities thus will be supportive in reducing the poverty level.
Copyright Business Recorder, 2020
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