Daily Times - Leading News Resource of Pakistan[U]
Saving local manufacturers[/U]
Industry to approach courts if level-playing field denied: PAMA
KARACHI: The industry will approach superior courts if the level-playing field is disturbed, said Pakistan Automotive Manufacturers Association (PAMA) Director General Abdul Waheed.
Upon the move of the Board of Investment (BoI) to push a summary to the Economic Coordination Committee of the Cabinet (ECC) to include SKD under import tariff regime at duty rates that may match those levied on completely knocked down (CKD) for the present manufacturers, in a meeting to be held on Tuesday (today), PAMA DG said superior courts will be approached if import in semi-knocked-down (SKD) form on concessionary rates is allowed.
A source in the Ministry of Commerce informed that this push of BoI to include SKD in the tariff regime is in its previous pursuit of getting something approved for a Japanese bike maker for which it was trying to get concession approved in the New Entrant Policy. “This issue was not even on the agenda of ECC, circulated earlier on Monday, while the committee has many times in past rejected the proposals of the investment board regarding tariff adjustments,” he added. The way this summary is being pushed has stamp of a major scam in the making.
“But, the BoI is quite determined in pursuance of its agenda of destroying local industry to benefit a few in the guise of fetching foreign investment,” said a source, adding that the ulterior motives of the board are evident from its deliberate push of inclusion of a non-issue in the tariff regimes meant for CKD and completely built unit (CBU).
The ECC, he adds, after consultation with the local auto industry agreed on bringing down CKD duty from 15 percent to 10 percent and CBU duty from 65 percent to 50 percent. The tariff for localised parts if imported was agreed to be 30 percent. “But the BoI has managed to move a new proposal that any new technology import in the shape of SKD shall be cleared on CKD rates of 5.0 percent,” he added. It means that the understanding reached to level of CKD rate to 10 percent has also been breached.
The move will completely wipe out the vending industry from motorcycle manufacturing rendering unemployment of hundreds of thousands of skilled workers while inflicting huge revenue loss to the national exchequer, Pakistan Association of Automotive Parts and Accessories Association (PAAPAM) Chairman Munir K Bana said.
While the fact is that any SKD import is taxed under punitive duty domain in order to protect local manufacturers, said the source. And the actual meaning of the board’s proposal is that engines and other parts in SKD form are imported then the government’s efforts of localisation will be hampered while 25 years of gains in engineering will go waste, he added.
This, he asked, is beyond comprehension why the board is hankering after this pseudo-foreign investment at the cost of huge well-established local auto industry. Even India has disallowed world famous bike manufacturer Harley Davidson when they sought permission for SKD concessions. The BoI should learn a lesson from Indian authorities who always safeguard their national interest by protecting their local industries, Bana reasoned.
The Indian authorities have categorically rejected the SKD concession request on the grounds that allowing SKD will mean that no local labor or engineering concern gets any benefit from local manufacturing, he mentioned.
PAMA director general said the industry is going to approach court if undue favours are granted or any drastic change is undertaken at the behest of a new entrant as already around 100 bike makers are manufacturing quality motorcycles on existing tariff.
Earlier, a sub-committee headed by BoI Chairman Saleem Mandviwala proposed to ECC reduction of import duty from 65 percent to 40 percent on motorcycle CBU instead of the agreed 50 percent with the local industry players and different stakeholders.
And that proposal too was bitterly opposed by not only the members of PAMA and PAAPAM but also those Chinese bike manufacturers who want to operate in the organised sector, saying that the BoI chairman is seemingly appeasing foreign investors and importers without realising how destructive this would be for the local industry that is providing livelihood to hundreds of thousands of people in different cities.
They said that the local vending units have attained localisation up to 90 percent but the sub-committee did not realise the achievement and planned to roll back all allied industry through its recommendations to ECC.
It is worth adding that during the meeting it was proved to the committee that import duty on motorcycles in CBU condition in India was 100 percent and 90 percent in China. The committee was further shown tariff rates of India where the CKD rate was 10 percent while SKD rate was being maintained at 60 percent with strict rules regarding the eligibility of CKD and SKD.
The PAMA DG said the local industry has developed itself to be an export-oriented industry and has successfully started exports of 70cc and 125cc models, but a few well-placed individuals apparently wanted to have their pound of flesh at the cost of millions of persons associated with this industry and billions of rupees already invested in it, he added.