Local cement manufacturers create value-added benefits to boost the national economy

The current measures taken by the country to control the COVID-19 pandemic are vital to sustain the nation’s economy. In the interest of the country’s economic growth, any suspension or temporary ban placed on the importation of essential and non-essential goods which can be manufactured locally will help immeasurably in currency stabilization, boosting of local employment levels and supporting the local economic recovery. Therefore, adopting ‘the home-industry-first’ approach is critical when re-opening the domestic economy to fast track post -pandemic recovery, INSEE Cement, a major cement manufacturer said this week in a media release. 
In the construction industry, nearly all the Asian countries are capable of manufacturing cement to meet their demand. Sri Lanka and the Maldives are the only countries who are importing substantial percentage of their cement requirement. Whilst Maldives does not have cement manufacturing plants, Sri Lanka has more than adequate manufacturing capacities to cater to 100 per cent of the existing annual cement consumption need of 6 million tons in a normal year which INSEE Cement estimates to be around 3.7 million tons in 2020 due to the COVID-19 impact with its local production capacity of 7.3 million tons per annum. 
Furthermore, a new local cement manufacturer is ready to enter the market with 2.3 million tons capacity plant being built with a US$75 million investment in the South, bringing the total local cement manufacturers capacity up to 9.6 million tons per annum. 
The new plant is likely to open in another 3-6 months at the Hambantota port. This would increase the shared value created by the cement producers and ensure that the local manufacturers have enough capacity to cater to the demand leaving no room for a cement shortage in the country for the next few years even with a reasonable positive growth. 
The island-wide strong dealer network ensures product availability in all areas as its assets are spread around the country in close proximity to all the markets and therefore both local manufacturers have sufficient capacity to cater to the countrywide demand. However, currently the supply is being impeded due to curfew and inter-district transport restrictions rather than lack of capacity. 
Capacity of the local manufacturers can be verified through the Board of Investment (BOI) as most investments are BOI-approved or anyone can visit the manufacturing facilities and verify the accuracy of these facts. This information is also provided to the statistical department of the Central Bank of Sri Lanka on quarterly basis for the compilation of national economic indicators.
Local cement manufacturers are providing a large amount of revenue to the government through various direct and indirect taxes, lease payments, royalties utility payments, etc and the value of investments made to build these factories is over Rs.115 billion. In comparison, the total asset value of all cement importers is less than Rs. 2 billion. 
Commenting on the shared value created in the industry, Nandana Ekanayake, Chairman /CEO of INSEE Cement Sri Lanka, stated, “Being the only fully integrated cement manufacturer, we produce best quality products essential for extensive infrastructure projects. Today, INSEE Cement maintains around 40 per cent share in B2B project segment due to high and consistent quality. We are also capable of customizing products based on project requirements. The contribution made to boost national economy by locally manufacturing quality cement is immense.”
The recent COVID-19 pandemic situation has caused a significant decrease in cement demand and local cement manufacturers are struggling to sell to cover their minimum fixed cost. In a situation where cement manufacturers are struggling for survival, this may lead to a negative impact on the people and their livelihood. Currently local cement manufacturers provide direct and indirect employment for around 25,000 individuals and more than 3,000 local suppliers are dependent on these manufacturers. If bag cement imports continue as usual many Sri Lankans will lose their jobs while local consumers’ money is directed to the wages of workers in India and Pakistan (imports of cement), the release said. 
By producing the total demand for cement within the country, the local cement manufacturers can significantly contribute close to 0.5 per cent to GDP growth. Hence, facilitating an environment to boost local manufacturers across all industries is very vital for developing economies. This will further uplift the national economy and open a dynamic, high growth profitable market, cementing into power a stronger and sustainable Sri Lanka, it said.