July 13, 2013

Auto Policy may be reviewed – Sabir Shaikh

Auto Policy may be reviewed Sabir Shaikh MOBILE WORLD Magazine


uring last 10 years, there was huge sales tax evasion and under invoicing of automobiles imported parts due to non registration in sales tax by auto sector dealers all over Pakistan. Chief Coordinator APMA Mohammad Sabir Shaikh disclosed this while talking to MOBILE WORLD.

He said there is a turn of Atlas Group in Motorcycles and Indus Motor Company (IMC) in four wheelers influencing the government in policy and taxation measures including all four concerned ministries.


Sabir urged the dire need for posting of reliable and reputed officials at the dry ports which were never involved in any corruption cases. He said government should also strive hard to register all dealers of two and four wheelers including all auto sector stakeholders in the sales tax net.

According to Sabir Shaikh all four ministries related to auto sector i.e., ministry of industries and production, ministry of commerce, ministry of finance and ministry of science and technology were involved in destruction of automobile industry in Pakistan while Chairman Engineering Development Board (EDB) should be immediately replaced by the new government.

Replying to various questions Sabir further elaborated that in last 14 years, PAMA and PAAPAM had stronghold in policymaking of the government including tax structure while Chinese bike assemblers’ body (APMA) and various Chinese vehicle manufacturers were not allowed any representation in policymaking.

In case the new PML-N government maintains the same policy, which had been practiced for the last 14 years with monopoly of handful assemblers, the auto sector will fail to prosper in coming years. It is high time that government should take into account the development of Chinese bike assemblers and their thriving vendor base relating to production, sale and market share before finalizing a new policy for the sector.

In the past, Atlas Honda, being number one assembler and market leader, had remained in the forefront in guiding the government policies in his own favor, instead of the country’s interest. Therefore, before finalizing any new policy after the budget 2013-2014, the government must take on board the low cost bike producers whom were not only successfully fulfilling the local demand but also exporting local assembled bikes to countries like Afghanistan, Bangladesh, Sri Lanka and many African countries.

Sabir suggested that government must seriously consider lowering sales tax to registered person (from 16 to 15 percent) but from registered to unregistered persons or firms must be increased to 18 percent from current 16 percent.

All zero rated imports must be fixed at minimum five percent customs duty. In auto sector, all the Input Output Ratio Certificates (IORCs), which are valid up to June 30, 2013 should not be revalidated and one custom duty on imported parts and one custom duty on CBU imports e.g. for two wheelers custom duty on CKD parts (localized or non-localized) should be fixed at 25 percent. Currently non localized parts have 10 percent customs duty and duty on localized parts is 38.75 percent.

He said custom duty on CBU two wheelers should be not more than 45 percent which is currently over 50 percent. The government issues list for import through EDB to OEMs and assemblers, which should be abolished immediately as it was cumbersome and time consuming exercise. Besides, the entire auto sector is burdened with many SROs and notifications. There must be one policy document or the SRO or notification for entire auto sector as it will discourage corruption. Valuation advises and ruling issued in the last 10 years on auto sector should be scrapped immediately as they had only encouraged informal trade through various channels and misdeclaration, Sabir Shaikh concluded.

-Published on page#18 in June-2013 edition of MOBILE WORLD Magazine

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