Paapam raises concerns with secy industries on auto policy

LAHORE: Pakistan Association of Automotive Parts and Accessories Manufactures (Paapam) raised concerns about the granting of new entrance status to M/s MTW Pak Assembling Industries under the auto policy that expired on July 1, 2016 with the Federal Secretary Industries Khizar Hayat Gondal.

A statement issued Monday said a Paapam delegation, led by Chairman Mumshad Ali, along with Senior Vice Chairman Mashood Ali Khan, former chairman Mohammad Saleem, and Saeed Khan met with the secretary and apprised him of the status of the industry on the new entrant policy and allied issues.  The delegation informed that the tractor industry was already performing under capacity due to frequent shifts in the GST regime, erratic tractor subsidy schemes, and agri-economy crisis. If work needs to be done, it had to be on creating demand rather than supply, the statement added.

The delegates also discussed the zero-rated duty on tractor import for three years, and called it harmful for the local industry. Stating that the localisation level was at 95 percent from the 40 percent mark in the 80s, they said that Belarus tractors had been assembled in Pakistan by FECTO group and many of its parts were localised back in the 80s.

The impact of regulatory duty on steel products was also brought to the notice of the secretary, which has increased the cost of raw materials for the auto part manufacturers. “In certain cases the duty impact on steel raw material is up to 50 percent, and this regulatory duty is against the cascading principal of duties in the auto policy which levies minimum duty on raw material,” the delegation said.

The delegation informed the secretary that with the import of used car under baggage, TR, and gift schemes, chances of new entrants in car assembly were next to none. The delegation proposed to reduce the GST on small cars as was the case in tractors. They also suggested to gradually reduce the age of used cars to increase car sales, and attract new investment by existing players in further localisation of hi-tech parts such as engines and transmissions.

The delegation also apprised the secretary about the evaluation of tractor and motor cycle parts far below the actual prices. The secretary was informed that tractor parts being imported were evaluated at $1.5 per kilogram, whereas the price of these parts should be around $7 per kilogram.

The secretary issued instructions to the staff concerned for resolving the issues of the auto part makers, and assured of his support.