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January 9, 2014
 

New Investor vs. Old Assemblers

nef new enterent forum mobileworld.com.pk
 

The New Entrant Forum (NEF) for Four Wheeler Segment has strongly condemned the hegemony of existing assemblers on all government levels thereby dictating the policies of their choice and blackmailing consumers in the country.

In this regard the Forum addressed two letters to Chairman Board of Investment Muhammad Zubair on 18th and 25th November 2013 and dispatched the copies to Minister, Water & Power who is heading the Committee to finalize proposals for New Auto Policy, and Secretary Industries, Shafqat Naghmi.



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The Forum of New Entrant/ Investors was surprised to know that the AIDC (Auto Industry Development Committee), authorized to approve all new entrant cases; was comprised of the representatives of assemblers/ vendors of Automobiles already working in the field. This includes the giants like; M/s Pak Suzuki, Indus Motors (Toyota) and Atlas Honda etc. Due to their vested interests the New Entrants were facing lot of problems and hurdles in getting their case approved.

In addition to this, in AIDC meetings three to four representatives along with the nominated members were participating. As a consequence to which the decision making on any matters were badly influenced. Therefore, in last two years only two cases were approved by AIDC, including one that was strongly influenced by present Chief Executive of EDB.

NEF consists of the members who are already approved as New Entrants or their applications were pending with AIDC, while creation of this forum was to tackle the issues faced by New Entrants and to deliberate on new Auto Industry Policy (AIP).

The Forum pointed out that under the prevailing AIDP (Auto Industry Development Program) a new entrant is forced to achieve the present level of deletion within three years whereas Pak Suzuki took 40 years, Indus Motors and Honda took 25 years to achieve this level. They increased their deletion upon achievement of feasible quantity of sales.

It may be interesting to note that deletion agreed for four wheelers under the present AIDP was freeze since last 5 years but no penalties were imposed on present assemblers till to date.

NEF said that five years time has been given to New Entrants/ Investors of other products to achieve the present deletion level, how can four wheeler segment achieve it in three years. It should be given eight to ten years to achieve the present deletion level.

In its proposals for the new AIP, the NEF urged that:

  1. It should be also applicable on new entrants/ investors which are approved under SRO 1098/I/2012.
  2. The role of AIDC should be changed as advisory body; not as approving authority.
  3. A separate body should be created excluding the representatives of assemblers/ vendors to have approving authority for new entrants/ investors and other matters related to Auto Industry.
  4. In AIDC meeting, only nominated members should be allowed to participate. Alternate representatives should not be allowed.
  5. New entrant/ investment should be allowed to achieve the desired present level of deletion within eight to ten years as present assemblers achieved these levels in 2 to 4 decades and upon achievement of certain levels of sales. This step is necessary in order to make this policy practicable, NEF concluded.

It may be mentioned here that 17th meeting of the AIDC was held under the auspices of Engineering Development Board in Islamabad on December 10, 2013 having New Entrant items on its agenda.

  • M/s Tayyaba Motors (Pvt) Limited seeking assembling/ manufacturing of Mini Van/ Cargo Van/ Pick-up.
  • M/s Ghandhara DF (Pvt) Ltd., assembling Mini Van/ Cargo Van/ Pick-up.
  • Review of localization plan issued for the manufacture of Automotive Vehicles by M/s Al-Haj FAW Motors (Pvt) Ltd.
  • Assembling/ manufacturing of Mini Van/ Mini Truck/ Pick-up/ Single Cabin Diesel Engine, 2200cc by M/s New Allied Motors (Pvt) Limited.
  • Introduction of new category for Pick up by M/s Master Motor Corporation (Pvt) Limited.

List of invitees for the above meeting ranged upto 36 people including 9 participants from various government departments even the chairman HEC was invited, which was quite irrelevant to subject matter. The other 25 included five representatives of the concerned parties, chairman and vice chairman PAAPAM, chairman PAMA, CEO Honda Atlas Cars, Saquib H. Shirazi CEO Atlas Honda Karachi, CEO Pak Suzuki Motor Karachi, Sikandar Mustafa Khan chairman Millat Tractors, CEO Ghandhara Nissan Karachi, Tariq Ahmed Khan, Director Tech. Indus Motor Co. and other 11 people but did not invite the chairman or any representative from APMA.

Commenting on this situation APMA chairman, Muhammad Sabir Shaikh lamented that his Association is the main stakeholder of Automobile Industry having more than 60 percent production by its members within the country but EDB authorities did not invite him. Bureaucracy of EDB has always ignored the true representation of automobile industry and gathered irrelevant bunch of blue eyed people who could not solve the problems being faced by the country since last one decade, Shaikh added.

-Published on page#10, December-2013 edition of MOBILE WORLD Magazine





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