PESHAWAR, May 23: Several business groups from three countries have shown interest in establishing cement factories in the Frontier province to tap local resources and capture booming reconstruction market in the country and neighbouring Afghanistan.

“During the last three months, investors from Canada, UK and UAE have visited different cities of the province and have expressed willingness to install cement factories,” said Riffat Pervez, provincial director Board of Investment.

Despite political instability and lack of allocation of funds for public sector development programmes, the local cement industry faced recession phase but still recorded an average annual growth rate of 2.96 per cent from 1990 to 2002 that further shot up to 20 per cent between 2003 to 2007.

“The boost in cement sector is due to the rising construction activities locally and reconstruction activity in Afghanistan, and soaring development expenditure by the government,” he said, adding that the NWFP had seven cement manufacturing units, while there were total 29 units in the country, which contributed 25 per cent of cement productivity.

NWFP has a disadvantage of being far away from the sea-ports due to which cost of production in the province is higher as compared to rest of the country. However, the province has a great potential in the mineral sector. It has abundant raw material including limestone clay and gypsum in Kohat, Karak, Lachi, Lakki Marwat and Dera Ismail Khan.

Cement and marble/granite are two important sectors which attracted a lot of investment in the province despite law and order problems. A number of local and overseas Pakistanis and foreign investors are showing keen interest in the cement sector.

Presently, the cement industry of Pakistan is heavily burdened with taxes in the face Rs750 per ton as federal excise duty and 15 per cent general sales tax. In addition to these taxes, the industry also pays provincial levies, including royalty and excise duty on acquiring of raw material.

A comparison of taxation and retail prices with other regional countries shows that taxation in Pakistan was highest while cement retail prices were the lowest as compared to other cement-producing countries of the world.