The meeting between Engineering Development Board (EDB), Pakistan Automotive Manufacturers’ Association (PAMA) and Pakistan Association of Auto Parts and Accessories Manufacturers (PAAPAM) to discuss auto industry development program (AIDP-II) for 2012-2013 to 2016-2017, has been adjourned without any conclusion as the local manufacturers and EDB are firm on their respective viewpoint.
According to sources, the representative of local auto industry have strongly opposed the notion by EDB that the new AIDP will bring in more investment and technology to the country. They said that the EDB’s proposal will wipe out the local auto parts manufacturers and the OEMs will prefer to import their models from Japan and other countries after a drastic cut in import of CBUs as manufacturing a vehicle and paying the duties on it will be more costly. According to the sources, the representative of auto industry registered a strong protest against the EDB’s recommendations saying that these will affect the employment of over 1.5 million workers in auto and allied industries besides inflicting a massive damage to foreign reserves and national economy. They said that the industry has already been facing the menace of smuggling, under invoicing and misdeclaration and this new proposal will also only result in junk being dumped into the country and not the technology and Pakistan will follow into the footsteps of New Zealand where the local auto manufacturing industry has been vanished completely. They said that this is being done just to facilitate entry of one bike maker which does not even fit into the criteria of New Entrant and it will undo the achievements of last 20 years in engineering sector which is the only sector surviving despite adverse Govt policies like used cars imports, etc. As per the EDB plan, for the two-wheeler sector, 50 per cent import duty is proposed on CBUs in 2012-2013 from the present 65 per cent. While duty on non-localized CKD is proposed to be slashed to 5 per cent from 15 per cent, and the duty on localized CKDs is proposed at 25 per cent in 2012-2013 from 47.5 per cent. Similarly, after making reduction in the subsequent fiscal years, the duty on parts would be brought to five per cent by 2017-2018. On the other hand, the two wheeler industry had suggested the government to bring down the import duty on CKD kits to 10 per cent from 15 per cent and CBU rate to 55 per cent from 65 per cent. For cars, duty on non-localized CKD kits is currently 32.5 per cent which the EDB proposed to slash at 20 per cent, while on localized parts the import duty will be reduced to 35 per cent from 50 per cent next year, which will be further brought down to 20 per cent by 2016-2017. The rate of duty on 1000cc CBU is suggested at 40 per cent from 50-55 per cent followed by 50 per cent on 1,000-1,500cc from 60 per cent in 2012-13, while CBU duty on cars from 1,500cc to 2,000cc is proposed at 60 per cent from 75 per cent. The EDB road-map also includes withdrawal of regulatory duty of 50 per cent on cars exceeding 1,800cc being an impediment to growth in this segment, but the biggest gainers will be the importers of Pajero, Land Cruisers, BMWs and Mercedes vehicles. The automakers said that the policy will only benefit the luxury cars importers and the claim that consumers will get cheaper cars is baseless as cars above 2000cc are attractive for common man which proves that the policy and expected results are poles apart.
