Auto parts manufacturing industry terms Competition Commission of Pakistan’s report on automobile sector as arbitrary and inaccurate

Karachi, February 25, 2013 (PPI-OT): The auto parts manufacturing industry, terming the CCP report on automobile sector as arbitrary and inaccurate, has observed that Competition Commission of Pakistan’s report is geared towards promoting Used Car Traders Mafia and total closure of the mother of all industries (i.e. the auto industry).

Pakistan Association of Automotive Parts Accessories Manufacturers Chairman, Munir Bana, stated on Monday that CCP’s recommendations, if implemented, would also result in closure of already traumatized downstream auto parts manufacturing industries, rendering jobless over 2 million direct and indirect workers of this sector.

Chairman Munir Bana and Vice chairman, Usman Malik, expressing dismay over the report’s one-sided findings and biased recommendations, pointed out that it is flawed as it is not based on the competition issues arising out of intra-local automobile players. Instead, the report compares locally assembled cars with used cars, which are illegally imported by traders against concessions allowed only for overseas Pakistanis.

Mr. Bana stated that such illegal activity of used cars trade is by no mean comparable to the production of new cars in Pakistan, but unfortunately, this has been taken as a basis for determining the competition issues by the commission.

He further said that report criticises high Tariff protection (on new CBU vehicles and CKD Tariff) given to local manufacture of vehicles, but CCP is unaware that our protection is far lower than other developed countries like China, Thailand and India. Secondly, while supporting used car import through Tariff protection, CCP is again ignorant about SRO 577, which provides unjust concessions to used car imports. By this SRO the taxes collected are far less than the normal Tax regime or the revenues collected from local auto industry.

He said that economists regard industry as the engine of growth, which serve as economic stimulus for all other sectors, including service industry. Therefore, he said it is shocking that the Competition Commission is oblivious of the fact that from 2001 ~ 2007, when the economy was stable and inflation and rupee depreciation were under reasonable control, the local car prices remained stable and there were no major increases in prices of local vehicles. During this period, due to stable policies of the government during 2004-07, the auto industry also went through a period of tremendous expansion, with investment of over Rs.40 billion and with volumes going up by over 500 per cent.

These developments made the auto industry one of the top five industrial sectors of the country in terms of contribution to tax revenue, acquisition of hi-tech manufacturing technologies and generation of employment.

PAAPAM vice chairman Usman Malik pointed out that the CCP should know that business environment in Pakistan at the moment are confronted with hours of power loadshedding, weeks without natural gas and extremely bad law and order situation. This industry in spite of these problems has been the top employment generator.

He observed that there is no comparison between industry and illegal trade of used cars, as the auto industry leads the large-scale manufacturing of the country, hugely contributing to the GDP and the revenues, while bringing in long-term local and foreign investment, generating widespread employment opportunities and opening up avenues for the country to acquire technology and attain modern systems of the outside industrial world.

He said that report seems to have been issued with malafide intentions, as the commission did not consult auto industry associations, and only aims to irreversibly damage the auto industry.

For more information, Contact:
Syed Nabeel Hashmi
Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM)
16-B, Westwood Colony, Thokar Niaz Baig, Lahore.
Tel # +92 42 37498474-5
Fax #+92 42 37498476
Cell: +92 333 4372500
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