The auto industry went through a fundamental transition during the year 2006 and 2007. The industry went from an era of deletion program to Tariff Based System.
PAAPAM played a pivotal role in this transition. Maintaining a long term security of its members during shift to TBS was the key concern. Some of the outcomes of PAAPAM’s interaction with EDB resulted in the following measures;
Achievement of 35% rate of customs duty on auto parts while maximum duties were being brought down to 25%.PAAPAM convinced the Government that a duty of 35% was still not enough protection. As a result, under SRO 693, additional 15 % duty on auto parts was levied. The total duty today, stands at 50%. The after market is a huge market and part manufacturers needed an increase in their market share. Massive under invoicing and mis-declaration posed as major threats. PAAPAM conveyed this message effectively; as a result, duty on commercial imports of locally produced auto parts under SRO 693 was increased from 35% to 50%. PAAPAM believed that to make the local vendors viable against imports, manufacturing input costs had to be reduced. Based on PAAPAM’s continuous interaction with EDB and CBR, under SRO 655 the duty on raw materials was brought down to 0%. Components and sub-components also went through a reduction in import duties. The Government planned for a gradual reduction of duty on localized parts from 50% to 35% between 2007 and 2010. PAAPAM after extended interactions was able to cap this figure to a minimum duty of 45%. The Government also planned for a gradual reduction in duty for non localized parts from 35% to 25% between 2007 and 2010. PAAPAM was able to cap this figure to a minimum of 30%. After detailed deliberations, to maintain and continue the pace of localisation, the following parts were selected for duty increase;a) The duty on Alternator, Starter Motor, Water Pump, Fuel Pump, Fuel Filter, Seat Recliner and Air Cleaner will increase from 35% to 50% in July 2009.
b) Customs duty on Power Steering, Engines and Transmission will increase from 35% to 50% in July 2010.PAAPAM agreed to AIDP tariff proposal based on the presence of p re-decided AIDP support pillars. AIDC (Auto Industry Development Committee) was to be formed for removing impediments in the implementation of the policy and developing refinements in the policy wherever required. Absence of this committee had been impeding progress of AIDP implementation. PAAPAM was in continuous dialogue with, and generated pressure on, EDB to implement this first step. The Committee has now been setup and notified, and will initiate work soon. AIDC Committee was proposed to have 2 Members from Vendor’s side and 6 from OEM’s.
PAAPAM had strong reservations on this issue and proposed equal member representation. EDB has accepted PAAPAM’s proposal and an appropriate balance has been created in the newly formulated committee. Discussions on the structure of vendor representation is ongoing. To check the impact of TBS on vendor industry, a questionnaire was developed and forwarded to member companies for their input. Based on inputs, and compilation of data, future strategy will be developed. It will also help PAAPAM develop evidence based advocacy on this issue.
A working group of vendors in the auto industry was formed within Planning Commission on 5th September 2007. Ten vendors from various technologies were selected as a part of the working group. The objectives for the working group were set as follows – To facilitate the growth of a competitive vendor industry which meets the requirements of the domestic sector as well as global demand in terms of quality and cost.
Auto exhibitions carry several benefits for the industry. They provide an opportunity to display the state of industry to various government authorities, the general public and potential customers. Exhibitions bring in after market dealers, creating opportunities for exhibitors. They also generate an image of Pakistani industry in the international arena. Finally, it provides PAMA and PAAPAM an opportunity to work together and to display their strengths. A very successful auto show, PAPS 2007, was arranged by PAAPAM between 22nd and 25th February, 2007. The event had an active participation of OEM’s and the vendors. Two foreign exhibitions were handled by PAAPAM during 2007. Hanover fair and Midest Show. Thirty companies participated in the two events.
The Membership Committee did an excellent job and 34 new members were added to the list of members during 2007. There were 15 new memberships from South and 19 from
PAAPAM thanks JETRO, JAICA and SMEDA for their understanding and support for the training requirements of the vending industry. We are also grateful to Prof. Mr.Ito and Mr. Ohira for their support. Mr. Hamasaki and Mr. Ito conducted in-plant training and improvement activities at several vending facilities in North and South. These training programs have been very successful and will continue during the year 2008.
The following seminars were held in North/South during the year;
The following press conferences were held during the year 2006-2007;
COMPUTERIZATION OF ACCOUNTS
It was realized that PAAPAM accounts need to be computerised in North and South to avoid any ambiguity. This task was successfully concluded during the year. Now the accounts for both offices are being maintained on Quick books.
Proper and detailed membership database was compiled during the year 2007. New categories were added during compilation. The next step would be computerizing this database and its launch on PAAPAM’s website.
PAAPAM MEMBERSHIP DIRECTORY
PAAPAM’s membership directory was published during the year 2007.
FPCCI is an effective forum for forwarding PAAPAM’s point of view. PAAPAM nominated Mr. Siddiq Memon as their representative to contest for the position of Managing Committee Member. Mr. Memon was elected and now has additional responsibility as Chairman of Standing Committee on Automotive Industry. He has inducted six PAAPAM members to be a part of this standing committee.
UNDER INVOICING AND MIS-DECLARATION
On 10th June, 2007 PAAPAM delegation met Director General Evaluation to portray the impact of this menace on the industry. Several follow-up meeting were held and various options for improvement were discussed. Subsequently a group of vendor companies inter acted with the department on their individual issues.
NATIONAL INDUSTRIAL PARKS
PAAPAM co-coordinated and had several meetings with the CEO and the staff of NIP (National Industrial Parks). It was mutually agreed that the Auto vending industry is in a rapid growth phase and need to have its own industrial cluster in Karachi.
NIP agreed on PAAPAM’s proposal, for an allocation of 100 Acres land in Steel Mill downstream area. A questionnaire for land and utility requirements was sent to all members and their requirements have been forwarded to NIP. Work on this area is ongoing at present.