Gas tariff hike will collapse local tile industry: APCTMA
Gas tariff increase will also halt all the expansion and investment projects of the industry
KARACHI (Dunya News) – All Pakistan Ceramic Tiles Manufacturers Association (APCTMA) on Wednesday pleaded the government to withdraw increase in gas price as it will make locally produced tiles uncompetitive in local and global markets and will lead to thousands of jobs losses.
In a statement issued on Wednesday, APCTMA spokesman said that tile industry is in the revival phase and expecting relief measures from government against the difficulties of rising energy prices, high tax rates, extremely low Import Trade Price (ITP) of imported tiles from China in addition to massive inflow of smuggled tiles from Iran.
He urged Finance Minister Asad Umar and Minister for Petroleum Ghulam Sarwar Khan to take back increase in natural gas tariff. As we understand gas price for general industrial and captive power plants has been increased by 30 pc from Rs. 600 to Rs.780 per mmbtu.
This announcement will have negative impact on direct and indirect employment of over 50,000 in the local tiles industry and It will stall the growth in construction sector which is booming on the back of rapid urbanization and other construction activities of large malls, office buildings and apartments across the country thus making all the efforts of employment generation a futile exercise.
Gas tariff increase will also halt all the expansion and investment projects of the industry which will also hurt the transfer of technology and creating skilled labour base and vendor industry in the country. The industry intend to invest in capacity enhancement, to further increase its production in order to meet demand, if the government supports the local industry.
It is pertinent to mention that the local tile industry is producing quality products that are comparable to top global tiles manufacturers, hence a big opportunity for employment generation. Despite losses incurred by local manufacturer as declared in the prior financial statements of public listed companies, the local industry is continuously contributing to the national exchequer in the form of sales tax, import duties and other taxes.
He said that industry has already been hit by huge influx of smuggled tiles and imports at lower valuation, which capture approximately over 40 percent of the country’s tile market of nearly Rs. 80 billion while domestic manufacturers continue to suffer owing to their higher production costs and uneven competition from cheaper imported products. Increase in gas prices will badly hamper the sales and profitability of local tile industry and will further intensify the share of imported tiles.
Local tile Industry is one of the segments of import substitution, development of which will stimulate the economy by job creation and uplift the construction sector. APCTMA spokesman urged the government to decrease the gas price helping the tile industry compete not only with foreign tiles in the local market but also explore export avenues earning precious foreign exchange creating thousands of new jobs in the process.
