EDB sets up six bodies to examine budget proposals

Engineering Development Board (EDB) has constituted six sector committees to examine budget 2012-13 proposals of different engineering sectors. Official sources told Business Recorder that steel sector committee will be headed by Masood Gul, chemical sector committee by M. Sadiq, Director Descon, electrical machinery- Chaudhry Sultan, Chief Executive, Creative Electronics, consumer electronics-Sarfrazuddin Chairman, PEMA and heavy engineering, Mian Sohail, Chief Executive, Greshams Eastern.
Budget 2012-13 proposals regarding tariffs will be considered by the notified committees that would send recommendations to the Federal Board of Revenue (FBR) through the Ministry of Industries. Chief Executive EDB, headed by Aitzaz Niazi, a renowned car showroom owner of Islamabad, will personally monitor the recommendations.
"It has been named as competitiveness and efficiency improvement exercise for achieving the objective of competitiveness and productivity," said an official statement. EBD has requested all stakeholders to send their proposals on amendments in the Custom Act 1969, the Sale Tax Act 1990 and Federal Excise Act 2005, the schedule relating thereto and the notifications issued there-under, to their respective sector committees by 11th March for evaluation.
The committees have been assigned to redress the tariff and other related issues of the concerned local industry effecting their competitiveness, further expansion and entrance in the global market. The proposals requiring administrative actions will not be entertained. Any proposal received after the deadline will not be considered and forwarded to FBR.
Last year, FBR had incorporated 50% of EDB's tariff proposals in the budget 2011-12 excluding auto sector. "Last year, FBR had promised to consider auto sector related proposals in the budget 2012-13. Let us see what FBR does this year with the auto sector," the sources maintained.
Commenting on the possible impact of negative list on local auto sector, the sources said EDB has requested the Commerce Ministry that only those auto parts should be included in the negative list which have export potential so that local auto sector should not become victim of trade normalisation with India.
However, local auto and vendor industry claim that they lost any hope when the Federal Cabinet approved negative list for trade with India which will be phased out by the end of this year, believing this will massively hurt the country's auto industry. Commerce Ministry had been facing strong resistance from different sectors which argue that the negative list should be phased out gradually over a number of years so that it would not hurt domestic manufacturing industry. Among top advocates of the go-slow policy is the automobile industry.
Secretary Commerce, Zafar Mahmood, recently stated that local car manufacturers are making huge profits but not increasing their production. He maintained that the government has to maintain a balance between industry and consumers and protect the interests of both stakeholders. Pakistan's auto assemblers are being accused of forcing the consumers to pay "on money" for the last several years. Besides, they earn profits from banks on the money paid by the consumers in advance.
EDB has argued that the three Japanese car assemblers, who share a market of 130,000 cars among them, regularly blame low volumes as main stumbling block that is impeding further indigenisation of critical parts and their effort to provide relief to the helpless consumers by way of rationalising cars' prices.
Buyer deposits the full amount for the car in a company's account (inclusive of all taxes, duties, levies and the duties to be paid for import of CKD) at the time of booking, but he is made to wait for three to six months to get a new car. Statistics available with the OEMs, indicate that an increasing number of buyers waiting in line to get their cars on priority, usually end up paying a premium called 'on money', ranging from Rs 30,000 to 100,000, to the dealers, EDB maintained. Recently, a spokesman of the EDB stated that a careful look at the profits of OEMs would show a sizable amount comes from interest income that fattens their account books.