Cement industry - an economic catalyst.

Byline: Muhammad Nadeem Malik

The importance of the construction industry in boosting the economy is globally tested and accepted. The increase or decrease in the sales of the cement is typically used as an indicator to judge the economic activity and employment conditions in the country. Even trading of the cement stocks play an important role in determining the Stock Exchange trading trends. Pakistan is presently going through an economic recession caused by various global and local economic factors. In this article, we will discuss the historic trends in the cement industry with forecasts and its potential. We will also briefly discuss how construction industry, especially the cement sector, can contribute to speedy revival of the economy.

Construction sector is an investment led, Labour intensive industry. It generates cash flow and creates jobs. There are around 35-40 construction allied industry those are triggered by an increase in construction activity generating trickle down and trickle across effect on the economy creating jobs. This shows the importance of the construction industry to boost the economy. Cement industry is the workhorse of the construction industry and is a reliable indicator to judge the strength of the economy of a developing country like Pakistan.

The construction industry anticipates a significant activity is not only the infrastructure projects of CPEC, work on Gwadar port but also foresee a lot of potential in the housing sector. Pakistan has a room density of 3.5 persons per room as against 1.1 persons per room in the developed countries. As such, there is a shortage of minimum of ten million housing units in Pakistan. As per the figures given by Chairman of the Association of Builders and Developers in Pakistan (ABAD), 100,000 houses per annum can create one million rotating jobs. Even if we consider it an exaggerated figure, the most conservative estimates suggest it to be 400,000 rotating jobs created by 100,000 housed per year.

Cement industry of Pakistan has witnessed a strong growth in the last 5-6 years and the production capacity of the industry has increased from 44 million tons/annum in 2014 to 59 mill tons in 2019. This is expected to touch 65 million tons per annum in the current financial year. This would be an increase of 50% in the production capacity in just 5 years. If we take into account the upcoming capacities, the total production capacity of the cement industry is expected to touch 75...