The Engineering Development Board’s (EDB) ‘unrealistic’ Auto Industry Development Plan (AIDP) has been rejected by local auto industry and line Ministries because of lack of consultations, informed sources told Business Recorder.
EDB has convened a meeting of Auto Industry Development Committee (AIDC) on July 17, 2012, to be attended by the representatives of Pakistan Automotive Manufactures Association (PAMA) and Pakistan Auto Parts Manufacturers Association (PAPAAM) to discuss AIDP with special focus on new investment in auto sector.
The sources said Planning Commission, National Tariff Commission (NTC), an arm of Commerce Ministry and Federal Board of Revenue (FBR) are key opponents of EDB’s AIDP besides the private sector.
Parliamentarians, EDB and Industries Ministry are of the firm opinion that three local car assemblers have formulated a cartel which explains why they are charging higher prices and ‘own money’ (premium on car prices) on different models.
Kashmala Tariq MNA, Hamid Yar Hiraj, Qudsia Arshad, Khawaja Mansoor Sohail and a number of senators have criticised local car assemblers for charging extra money from people. A couple of MNA’s even accused local assemblers of inducing officials in lieu of unprecedented protection.
Similarly, local auto vendors, it is alleged, have their own argument but they play in the hands of the cartel because they have to sell their products to them, commented an official on condition of anonymity.
When contacted, Abdul Sattar Khokhar, a Spokesman to the Ministry of Industries (MoI) told Business Recorder that new AIDP is almost ready but there are differences on auto industry investment plan which will be discussed on July 17(Tuesday) by the AIDC.
In reply to a question, he confirmed that Commerce Ministry which is being represented through NTC has sought some time to study the AIDP.
“NTC representative attended the first meeting on AIDP but he skipped the second meeting,” he added.
Replying to a question regarding FBR’s opposition on the AIDP, he said, FBR was duly represented who did not raise any objection.
When MoI’s spokesman Khokhar was apprised that Mumtaz Haidar Rizvi, recently retired Chairman FBR has confirmed to this correspondent that AIDP was prepared in ‘isolation’ which FBR cannot support, he clarified “FBR’s representative might not have taken the chairman into confidence but the FBR representative was on board on all matters.”
According to sources, MoI has repatriated FBR representative Dr Zubair due to his differences with the incumbent Chief Executive Officer (CEO), Aitzaz Niazi who is seeking two-year extension.
Senate Standing Committee on Industries, in its previous meeting had criticised EDB for its failure to deliver and Kishan Chand Parvani argued that allocation of funds to EDB is a waste of national exchequer.
Asked why Planning Commission is opposing the new AIDP, Khokhar argued that Planning Commission wants customs tariff for new motorcycle industry at five and ten percent.
Honda company maintains that tariff on new entrants in motorcycle industry should not be less than 10 percent whereas Board of Investment (BoI) wants five percent tariff on new entrants.
Yamaha Company, which intends to establish new plant in Pakistan, argues that if GoP sets customs tariff at zero percent the company will be in profit in five years, and in case of 5 percent tariff it will take 6 years to become profitable.
According to sources, Yamaha’s principal is hesitant to invest in Pakistan at 10 percent duty. “Finally, Yamaha is ready to invest in Pakistan and the company will introduce new model every year,” the sources continued.
Replying to a question, Khokar said that there is a dire need to introduce new small cars between the range of Rs 35,0000 to Rs 400,000 and a Chinese company is expected to come forward to set up a plant in Pakistan.
Copyrights Business Recorder