A new assessment by the Competition Commission of Pakistan has highlighted major challenges in the country’s cement industry, pointing to high costs, weak regulation, and risks of unfair market practices that could hurt long-term growth in Pakistan.
The study shows that cement remains an important part of the economy, contributing about 1% to GDP and supporting large-scale manufacturing.
However, the sector has slowed down in recent years. In FY25, production dropped by 1.5% due to weaker construction activity and rising costs.
Although production capacity has almost doubled over the past decade, factories are now operating at just above 52% capacity.
Experts say this reflects lower domestic demand, especially from the private construction sector, even though exports have helped reduce pressure slightly.
The report also warns that the industry structure makes it vulnerable to price coordination.
Cement is a standard product with high setup costs and limited differences between brands, which can encourage similar pricing behaviour among companies.
At the regional level, market control is more concentrated, with a few large companies dominating sales. Transport challenges and storage limitations also give local firms stronger control in certain areas.
Taxes and duties are another major factor, making up a large share of cement prices. Differences in provincial fees, transport rules, and energy costs further increase production expenses.
The report also points to issues such as smuggling, fake products, and weak enforcement at borders, which affect fair competition in the market.
Despite these problems, Pakistan’s cement consumption remains low compared to global levels, showing potential for future growth if reforms are introduced.
The regulator has recommended policy changes to improve competition, reduce costs, and strengthen enforcement in the sector.