Paapam flays change in policy in relation to motorcycle industry

RECORDER REPORT

LAHORE: The Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) has flayed the change in current policy regarding the motorcycle industry and said the plan to allow a new investor to import all motorcycle parts at five percent duty instead of current rate of 15 percent would not only be a negation of previous policies, but it would also encourage producers to bypass local vendors and manufacturers.

The Paapam Managing Committee members in a meeting held here on Monday observed that the sector had progressed tremendously due to consistent policy making on part of the government, but the new policy has threatened the industry growth.

The Board of Investment’s initiatives to give incentives to a Japanese motorcycle manufacturer’s re-entry in the Pakistani market at five percent rates had shaken the confidence of investors and local manufacturers.

It is also worth mentioning that the so called “new entrant” will recover its total investment in 4-5 years in the form of duty concessions alone, at a heavy cost to the exchequer.

“Import of already localised parts at CKD rate of duty will cause a rollback of the deletion programme already achieved after a lot of efforts. In fact several new local bike makers have also introduced a new 125CC motorcycles but no relaxation in localization was given to them. However, those parts, which are not being developed locally, could be imported but at higher rate of duty,” the Vendors’ Association members observed collectively.

Addressing the meeting, Paapam Chairman Syed Nabeel Hashmi said the policy U-turn was worrisome and against the interests of the country and future industrialisation.

He says that portrayal of the motorcycle manufacturer as a new investor conveniently overlooked the fact that the same brand was produced and marketed for decades in Pakistan, and was only forced to wind up due to its failure to compete with other brands, especially those from China.  He said vendors were dismayed at the government’s insistence in granting special status to this OEM on its re-launch.

“Motorcycle production has increased from 100,000 units at the start of the century, to around two million this fiscal year,” he said, adding that no other industrial sector had shown such high and sustained growth during the past decade.

In fact, Pakistan has emerged as a global leader in the production of 70CC motorcycles, where no single vendor dominates the market for a single part, but multiple vendors for a single part are available. This indicates the depth of the vendor industry in motorcycle parts.

He claimed that Pakistan now exported 125CC bikes as well.

Speaking on the occasion, Paapam Vice Chairman Munir K Bana pointed out that government claimed the new investment would introduce new technology to the country was a mere eyewash, as existing players had introduced the latest Euro-2 engines in their products without any special incentives.

“Existing players are even willing to import hybrid and EFI-based engines without special incentives”, he said. This was because many engine parts complying with new emission standards were produced locally, he added. He said Pakistan needed foreign investment however; the country should not be so desperate in attracting investment by catering to unit specific investment proposals so as to destroy one of its most vibrant sectors.

He said it was a wrong perception portrayed by various circles in the government that local industry was manufacturing substandard products. “We are making products as per design specification and quality as required by our customers,” he reiterated.