Motorcycles Industry experts are intrigued by the maneuvers of a Japanese manufacturer to obtain extraordinary concessions as a new entrant in the industry, even after being a significant player in Pakistan for decades.
Japanese investors from Yamaha have been meeting various government functionaries to obtain undue concessions and their efforts seem to be getting positive response despite strong protests from local industry players.
The recent series of meetings in Islamabad have sent jitters among local motorcycle and auto parts manufacturers. Local auto vendors are particularly hurt as they have worked hard to achieve over 90 per cent deletion in the production of motorcycles.
“A meager foreign investment of $150 million spread over a period of ten years does not warrant permission to allow import of all motorcycle parts at zero duty as demanded by the investor”, said one vendor. He termed the deal with Yamaha “highly controversial”, saying that Yamaha by no means is a new entrant since it already has a plant in Pakistan and only the license of the manufacturer was cancelled. In fact, three models of the company are still being produced in Pakistan (Yamaha Royal, Yamaha 4 and Junoon).
He said there is no justification for allowing additional concessions in the presence of the New Entrant policy in the Auto Industry Development Plan (AIDP). Allowing Yamaha to pass as a new entrant is going to pressurise thousands of motorcycle vendors to lay off 100,000 workers, he warned. He said that most high tech components like engine and electrical items are already manufactured in Pakistan to the complete satisfaction of the foreign brand principals. Even various high tech car components have been successfully localised under the government’s indigenous policy and only a few components like carburetors and EFI are being imported at 15 per cent duty.
Another vendor unveiled that the investor is possibly going to import Completely Knocked Down (CKD) kits from China and it would extract Japanese charges, which is totally unfair. He informed that local manufacturers were currently producing over 1.4 million motorcycles, which were sold at cheaper prices than Japanese brands. “The latest proposal from the Japanese company has sought more subsidy than the proposed investment over a ten year period”, said Syed Mansoor Abbas, an executive member of Pakistan Association of Auto Parts and Accessories Manufacturers (PAAPAM).
Yamaha is seeking a duty free status with no localisation requirement, whereas other industry members buy 90 per cent of the components from local vendors and pay an average tariff of around 15 per cent on imported parts, Abbas said. The current players, from Italy, China and Japan, are also in various stages of developing new models in the 100-150 cc range with the latest technology, he said.
However, he added, they were not offered any relief even on the import of the environment-friendly Euro 2 components, which have already been introduced. He said existing players rightly feel deprived of this subsidy, thereby creating two policies in one industry.
He said that the main losers would be auto-part vendors and there is no justification for allowing imported motorcycle parts at zero duty which are being produced in Pakistan. “Every country provides some protection to its industry while we intend to facilitate the importers”, said another vendor.
