Another Article related to this development....
Daily Times - Leading News Resource of Pakistan
Protection to motorcycle industry, new entrant policy
MoC submits proposal to ECC
[I]* Proposal states new entrants in motorcycle industry be allowed to start production with 25 percent locally manufactured parts
By Sajid Chaudhry[/I]
ISLAMABAD: The Ministry of Commerce has proposed to the Economic Coordination Committee of the Cabinet (ECC) that new entrants in the motorcycle industry should be allowed to start production with 25 percent locally manufactured parts and would be required to achieve 85 percent localisation upon completion of five years.
Those units that do not achieve the localisation plan would be penalised and will be required to pay duties equivalent to rate applicable on import of parts they would be importing during the first five years.
The ECC decided to form a committee comprising Planning Commission deputy chairman, Board of Investment (BoI) chairman, commerce secretary and industries secretary to present a detailed presentation highlighting trends, production types, importers, manufactures, rate of returns, technology type, tariff regime, barriers to new entrants and barriers to competitors in the motorcycle industry of Pakistan.
In accordance with ECC decision on July 3, 2012 taken on the summary moved by the Ministry of Commerce, a committee was formed under the chairmanship of minister for information and broadcasting. Meeting of the committee was held on July 17, 2012. After detailed deliberations, the committee agreed on the following general tariff reductions and new entrants’ policy for the motorcycle industry to encourage the introduction of new technology, exports and availability of a wider range of products for the consumers.
General tariff reduction proposed for the protection to motorcycle industry in Pakistan with ‘new entrant policy’ includes bringing import duty on import of sub-assemblies from 20 percent to 10 percent, import of Completely Built Units (CBU) and components for assembly or manufacture of vehicles in any kit form from 65 percent to 10 percent, Completely Knocked Down (CKD) kits not manufactured locally 15 percent to 5.0 percent, CKD kits manufactured locally from 47.5 percent to 25 percent. However, import duty on import of raw materials has been proposed to be maintained at zero percent and sub-components and components at 5.0 percent.
The new entrant policy for motorcycle industry will be applicable on motorcycles of 100cc and above with new technology, for new entrants the concessionary rate of duty for CKD kits shall be 5.0 percent, at the start of commercial production, localisation level shall be kept at a minimum of 25 percent. By the end of five years, localisation level shall reach a minimum of 85 percent: and the agreement template for new entrants, including the localisation plan, will be developed by Engineering Development Board in consultation with National Tariff Commission. The agreement would be designed in such a way that new entrant scheme is not misused. Non-implementation of localisation plan should result in the imposition of prevalent duties.
During the last meeting of the ECC held a detailed discussion on a summary proposed by the Ministry of Commerce regarding protection to the Motorcycle industry. Commerce secretary presented a general tariff reduction plan for motorcycle industry and new entrant policy having cessionary rate of duties on different equipment in the view of recommendation of the sub-committee constituted in the previous ECC meetings. ECC reviewed multi dimensional aspects of the summary and decided to form a committee comprising Planning Commission deputy chairman, BoI chairman, commerce and industries secretaries to present a detailed presentation highlighting trends, production types, importers, manufactures, rate of returns, technology type, tariff regime, barriers to new entrants and barriers to competitors in the motorcycle industry. In the same way presentation will cover viewpoints of new entrants, their requirements, optimal protection, view point of existing producers and impact on general public. This presentation will be presented in the next ECC meeting.