KARACHI: Industries and Production Minister Ghulam Murtaza Khan Jatoi while inaugurating Pakistan Auto Show (PAPS) has said that the government will support local manufacturers to increase export and help them grow to capture international markets.
Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) has organized a two day Pakistan Auto Show (PAPS 2017), which is being held from March 3rd-5th at the Expo Center, Karachi.
The minister welcomed the international exhibitors, who participated in this show and thanked them for the confidence expressed by them in the economy of Pakistan.
He also added that this exhibition truly depicts the potential of the Auto Engineering Sector of Pakistan, which has played a major role in the economic growth of Pakistan in recent years. This is evident from the phenomenal growth in the auto sector, which once again crossed the barrier of 218,000 automobiles in the previous financial year. “Hopefully the momentum will continue in the current year as well. I hope that the auto industry will gear up to the new challenges ahead of them and wish them all the success in meeting these challenges,” he added.
While talking about the auto policy, he said as a consequence of the new auto policy announced by the government last year, many international automotive companies have decided to set up assembly plants in our country. “The mega China Pakistan Economic Corridor (CPEC) includes projects for setting up of industrial zones and power generation plants along the entire route of the corridor, which have already attracted direct foreign investments into our country,” he added.
Meanwhile, Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) Chairman Mashood Ali Khan welcomed the minister and thanked him for applauding auto industry’s role in improvement of national economy.
“Auto manufacturing is a fully documented industry that ranks amongst the top three taxpaying industries in Pakistan. However, the industry’s performance and growth is being threatened by a few issues that can be solved if the government shows more vigilance and commitment to the policy prescribed in the ADP 2016-2021 and execute investment plan accordingly,” he added.
He said that the Auto Development Plan 2016-2021 was announced by the government after long dedicated discussion with the stakeholders and our suggestion to include the existing players and auto parts manufacturers for incentive was promised but omitted from final ADP.
“Localization of Hi-Tech parts in the country is possible only if the government supports the industry with investment incentives same as special Economic Zone (SEZ) and PAAPAM requests for SEZ status for setting up plants for parts not yet locally produced,” he added.
PAAPAM chairman said that they propose the following conditions to qualify for SEZ status under ADP: (a) Green field investment by global or domestic Auto Parts Manufacturers (b) Parts for Engine, transmission, suspension, body, etc. that have never before been produced in Pakistan for any auto assembler. Besides, level playing field should be offered to existing assembler as well.
He also highlighted the issues of Regulatory Duty (RD) which was imposed on steel two years ago when the prices of steel were low, but today international prices are constantly rising which makes it more difficult to bear the burden of RD.
“The new automotive development plan 2016-2021 has given tariff structures, and it is against the policy to modify its approved tariff structures by making the Levy of RD on raw material not manufactured locally,” PAAPAM chairman said.
He requested the government that all imports of raw material under SRO 655 be exempted from RD under SRO 568, as similar exemptions have been granted to other sector, such as import under SRO 565, SRO 678(1)/2004.
He also expressed concerns on free trade agreement (FTA) with Thailand & Turkey. Citing the examples of FTA with different countries already in place which have not given benefits to the country, the Ministry of Commerce should come up with a specific mechanism for FTAs under negotiation and also take the entire industry on board.
Automotive industry in Australia has been badly hit due to FTAs signed by Australia which did not benefit the industry and some of the manufacturing units are under closure this year.
“The automotive industry in Pakistan needs to be considered as special sector while negotiating with Thailand & Turkey as the sector in these countries is highly developed and Pakistan should be placed with them for Transfer of Technology instead of imports,” he requested.
“We must negotiate FTAs with an eye to the future. Pakistan cannot hope to break through unless it gets integrated with global supply chain & value chain, only smart FTAs will help us do that,” he added.
He urged the government to follow footsteps of Japan, Korea, and other countries which prepared their trade policies like warfare strategies so that their local industries did not suffer and now their companies are among the top auto manufacturers around the globe.
Toyota Corporation Vice Chairman Toshiya Azuma in his speech on the occasion said, “Pakistan’s new Auto Development Policy offers great incentives to the auto industry and it is already attracting many new automakers. The new policy will lead auto sector to more business growth while it will surely increase consumer choice.”
The thinking behind this policy will drive Pakistan’s auto industry forward, said Toshiya, adding that it can then compete with other regional auto industries with great success. “As an auto manufacturer based in Pakistan, our vision is to make for Pakistan, in Pakistan and with Pakistan,” said Toshiya.
He said that the auto industry is important for every developed country as this industry is often termed as the “mother of all industries” because it has many forward and backward linkages. “Many developed economies including USA, China, Thailand, India and Turkey have achieved superior progress because they had a strong auto manufacturing base,” he added.
He said the PAPS 2017 is a great success. “It will focus on the valuable role the auto sector is playing in the industrial growth and development of Pakistan. Such events greatly help local vendors and provide a platform to increase investments,” said Toshiya.
