In order to incentivize the Construction & Material industry and to promote construction activities across the country, the government in recent Budget announcement 2012-2013, has reduced FED (Federal Excise Duty) on cement by PkR 100 per ton in budget FY13, thereby fixing the applicable FED at PkR 400 per ton. The government has taken an initiative to completely phase out FED on cement and other items gradually hence, a further reduction in FED on cement is likely to be made in the future.
In addition to imported lumber which had shown phenomenal growth in past few years, the building material index at 10.6 percent of large-scale manufacturing (cement, steel, paints, glass, and plywood) is yet another indication of the consumption pattern of five major building materials used in the construction industry.
Despite disastrous floods in 2009 and 2010, slower economic growth, energy crises, and fluid political situation, this sector has shown some growth signs and import of Canadian lumber is rising. In 2008 the local market intake of Canadian lumber was less than 20 containers a month which according to KTMG recent estimates, has now reached to more than 200 containers a month. This is an encouraging sign.
Significant progress has been made by Canadian companies in the lumber and value-added wood products sector where Canadian exports have risen in sizable numbers. With a less than 1% share of forestry in GDP and commercial forest area of 11,820 sq km, Pakistan faces a shortage of wood for construction. A large quantity of timber based products such as wood pulp, paper board and manufactured articles of wood are imported annually to meet the shortfall.
The rising population of the country demands 800,000 housing units annually but only 300,000 houses are built per annum.
The Government has identified housing and construction as a major driver of growth and undertaken a number of measures to give impetus to this sector which helped revive construction activities in the country. In addition to above, sizable opportunities exist in the related area including Tiles and Flooring, Infrastructure Projects, HVAC Systems – Heating Ventilation Air Conditioning and Water and Waste Water Treatment Technologies.