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February 3, 2019

General Tyre plans to invest $200 million in new plant


February 3, 2019

KARACHI: General Tyre and Rubber Company of Pakistan Limited (GTR) has planned to invest around $200 million to set up new plant in the face of challenges including smuggling, especially via Afghan Transit Trade (ATT), and misdeclaration of tyres’ sizes by importers, an official said on Saturday.

Under its expansion plan, GTR plans to build a manufacturing facility at Special Economic Zone (SEZ), being established in Faisalabad, Punjab, under China-Pakistan Economic Corridor (CPEC).

“The government should provide us level playing field by controlling smuggling, under-invoicing, and ensure the stability of policies,” Hussain Kuli Khan, CEO/MD GTR Pakistan, said while talking to a select group of Islamabad-based journalists.

“If these issues are addressed then we have a huge capacity to create thousands of jobs and generate billions of rupees worth of revenue for the government to help boost economy.”

In Pakistan, around 35 percent of the total demand for tyres is met through imports, while smuggling makes up 45 percent, not only consuming local industries’ hard-earned revenues but also billion of rupees of taxes.

Khan said the government was urged to support local industry, so that the export potential can be enhanced.

Talking about another trend of illegal trade of tyres, Khan said they have reports as well as visual evidence regarding import of tyres, smaller in size, hidden inside the mother tyres. “The legal importers usually pay duty and taxes on the mother tyre, while they get away without paying anything for three to four other smaller tyres, concealed inside the mother tyre,” the GTR official said. Besides, he added that the misdeclaration of sizes of the tyres had also been an issue at the customs.

He suggested that Federal Board of Revenue (FBR) should make sure that without documents no tyres were sold in the market.

He said some circles had been suggesting a reduction in the Regulatory Duty (RD) to reduce smuggling, but it was not a viable solution. “This is not true as duty on truck/bus radial (TBR) tyres from China is zero-rated even then these tyres are smuggled into Pakistan,” the GTR official said adding a TBR plant cost over $200 million.

He said imposition of RD was a good step and needed to remain in place for 5 to 10 years. “This will give the local industry not only protection to plan and implement their expansion, but also an impetus to compete globally,” he said.

The GTR, which is currently producing 2.5 million automotive and one million motorcycle tyres (annually), meeting 90 percent of original equipment manufacturer (OEM), is also in talks with the new entrants in auto sector like Kia Motors, Renault, and Hyundai for meeting their future demands.

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