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June 28, 2014
 

Still nothing for Motorcycle Industry and Trade

mobileworld.com.pk motorcycle mobile world magazine
 

All the policies and SROs made in the last 40 years were not in the interest of the country, not revenue-oriented and were basically following an anti localization policy and also against the industrialization and employment. Government should focus in the budget on two types of duties – duty on spare parts (for OEMs, commercial market, assemblies, sub assemblies, components and sub components) and secondly on completely built up units (CBU’s)

The new budget is silent on the two wheeler industry in terms of its duties and taxes. However, the finance minister announced elimination of SROs in the next three years which has caused anxiety among the two wheeler industry.

After the approval of finance bill 2014-2015 by national assembly, the new shape of SROs 656/2006, SRO 693/2006 and SRO 655/2006 will arrive by first week of July 2014.



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APMA Chairman, Muhammad Sabir Shaikh said the bike industry was highly hopeful from the current government that it would bring down the customs duty besides introducing unified customs duty coupled with reduction in sales tax by at least one to two percent. However, nothing was done in the budget. He hoped that finance minister must be thinking to take some steps for the bike industry on the above issues.

He expressed his concern over the persistent delay in AIP whose exercise between the industry and the government got underway from October 2013 to May 2014.

He urged the government to settle the dust by announcing the policy either in the Trade Policy or separately so that the industries could make further investment.

He asked the government to make the valuation ruling as a part of the AIP because valuation ruling is just like the SRO.

Engineering Development Board (EDB), in continuation to previous practice, has initiated Competitiveness and Efficiency Improvement Exercise for the Fiscal Year 2014-15, as per prescribed Terms of References (TORs)/ Guiding Principles to redress the tariff and other related issues, which are hindering competitiveness of the industry and their entry into global market

The EDB in their letter before budget 2014-2015 announcement to auto sector said, it is to highlight that Federal Board of Revenue (FBR) has under-taken an extensive exercise for simplification / revision/ phasing out of concessionary SROs [including SRO related to Automotive Sector] with a view to analyze the impact of concessionary regime on industrial growth, export competitiveness, import substitution, further localization of parts and more importantly passing on the benefit of concessions to the end consumers.

APMA believes that FBR must understand that the government has to phase out auto sector SROs in the next two three months. Otherwise, two to three more years would again go in waste in understanding the issue.

APMA the government wants direct impact of taxation measures to reach the end users. However, it is only possible when government introduces a uniform policy for both large scale and SMEs. There is a need to remove hurdles of IORC besides bringing uniformity in valuation system, removing the hurdles like production certificates and importable lists by the EDB etc. This will help the industries to introduce new models at affordable prices.

APMA believes EDB took the pre-budget proposals every year but after budget announcement, the budget came out with a different direction which means that pre-budget meetings by the EDB, FPCCI & Chambers did not prove fruitful.

Engineering Development Board (EDB), in continuation to previous practice, has initiated Competitiveness and Efficiency Improvement Exercise for the Fiscal Year 2014-15, as per prescribed Terms of References (TORs)/ Guiding Principles to redress the tariff and other related issues, which are hindering competitiveness of the industry and their entry into global market

All the policies and SROs made in the last 40 years were not in the interest of the country, not revenue-oriented and were basically following an anti localization policy and also against the industrialization and employment. Government should focus in the budget on two types of duties – duty on spare parts (for OEMs, commercial market, assemblies, sub assemblies, components and sub components) and secondly on completely built up units (CBU’s).

APMA strongly urged that issuance of various permissions through EDB such as importable lists; production certificates and IORC should be done away in coming auto industry policy. All over the country the dealers of auto sector and parts should be registered in the sales tax net.

The committees formed by finance minister under FBR in which FPCCI and some other chambers were the members is not enough as there is a need to induct more experts of the field  including Motorcycle Industry of Pakistan.

The government must give its due attention to the two wheeler segment this year especially and efforts should be made to pressurize leading assemblers to bring a change in the decades old 70cc models. Policy hurdles, if removed, would encourage assemblers to introduce new models in the country.

Like past practice, Customs issued valuation ruling again loaded with confusion on same parts imported from China by the commercial importers and bike assemblers (OEMs). APMA believes that Chinese parts are of same quality either imported by the commercial importers or by the OEMs. But custom department imposes higher tariff on Assembler’s import and lower tariff for Commercial Importer.

Therefore, the Valuation Department should clearly mention that the commercial importers, Chinese domestic brands and Pakistani local brands are same quality and standards.

The original purchase price of the importers from China is much lower than prices mentioned in the ruling of 42 items issued by custom. The valuation ruling issued on March 31 is on very higher side. If government does not lower the values of these items then the smuggling will continue to thrive.

The government should realize that the main stakeholders are motorcycle assemblers of Pakistani and Chinese domestic brands who are producing more than one million units of two wheelers annually for the last many years. The 104 approved units of two wheelers are producing Pakistani brands in collaboration with Chinese assemblers. It seems that the AIP is being made at facilitating only three Japanese car and bike assemblers. Does the new auto policy really care about country’s revenue, industries, job opportunities, genuine localization etc? This is million dollar question and yet to be replied by the policymakers.

-Published on pages# 10 – 11, June-2014 edition of MOBILE WORLD Magazine





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