The Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM), taking strong exception to the new tariff structure under the proposed Auto Policy (AIDP-II) of Engineering Development Board, has said that this is a well-conceived strategic move to invite India to take over Pakistan’s comparatively tiny auto manufacturing sector.
Addressing the hurriedly called meeting of PAAPAM managing committee, Chairman Syed Nabeel Hashmi, who is also the chairman of Business Forum of Punjab, said that AIDP-II is being drafted actually by the Planning Commission on dictation of the IMF without taking the industry’s stakeholders on board and without considering the harsh realities faced by the local industry.
He stated that the proposed measures are bound to play havoc with plan of localization as well as the vending industry. The draft is a dream, aimed at abolishing support to local industry, he said, adding that the proposed cut in tariff structure actually indicated that the Planning Commission had a distorted view of industry, as it is not providing a road-map of progress for domestic players.
He said that under the new policy the EDB is proposing to import vehicles rather than supporting the locally manufactured units. And consequently, the biggest gainers will be the importers of Pajero, Land Cruisers, BMWs and Mercedes vehicles, he added.
He said that progressive growth in the motorcycle sector has so far been maintained by a policy which allows incentives for localization, but at the same time permits introduction of new technologies by allowing import of components against a different tariff. However, the proposed policy shift, to favour a single entrant which will import 100% parts at 5% duty, means that the new entrant will need to invest next to nothing to gain access to this market. Motorcycle manufacturing in the future will simply be an assembly operation, he noted.
He said that auto industry in Pakistan has welcomed new investment in all sectors, but urged that new investments should not endanger the existing industry and a level playing field.
PAAPAM Vice Chairman Munir K. Bana told the managing committee that PAAPAM favours step-wise trade opening with Indiaafter structural reforms, policy changes and capacity building of government departments, besides managing Pakistan’s trade policies and import regimes.” He suggested the TDAP to initiate a detailed study on the impact of opening doors to India with a focus on auto sector. He requested the Industries Department that TDAP should be given a target of supporting over 200 auto parts manufacturers annually with a target of $ 250 million export by 2014.
Mr Bana informed the committee that PAAPAM has conveyed its disagreement to the minister over new tariff structure of Auto Policy. He said that PAAPAM representatives also sought the Industries Minister’s help to impose restrictions on import of five year old cars which have massively hurt the local industry.
He appreciated the Federal Industries Minister, who has assured them that government would protect interests of the local industry before finalising any decision.
He said that after hearing the viewpoint of the auto industry, the minister has constituted a core group with the direction that the group should meet again and finalise the draft auto policy with consensus which will be sent to the Cabinet for approval.