No auto engineering SME avails DTRE due to complexity

Karachi, April 08, 2013 (PPI-OT): Only big exporters and large scale manufacturers are availing full benefit of duty-free raw material under DTRE Scheme, because SMEs can neither comply with the lengthy, complicated and cumbersome procedures nor can they import full consignment of containers.

This was stated by Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) Chairman Munir Bana and Vice Chairman Usman Malik.

Mr Munir Bana, Chairman PAAPAM, observed that the procedure of Duty Tax Remission for Exports (DTRE) has been so designed that not a single company from the auto engineering sector in Pakistan is benefiting from this scheme to increase the country’s export volumes. Stressing the need for consistency in export-related policies, he asked the government to simplify the complex nature of several segments of its policy, including DTRE and Sales Tax Refund system. “If the government removes all the bureaucratic red tape from the DTRE Scheme, making it practical and simple, exports of auto engineering sector can be enhanced manifold, as production cost will be minimised by at least 15 per cent, he added.

Mr. Bana appreciated the government’s efforts to introduce such “export-friendly” schemes, but showed reservations over implementation process of these plans, and suggested that the authorities should remove all impediments and apply the schemes in its true spirit.

Vice chairman Usman Malik stated that around 90 per cent of export-oriented auto engineering units are located in Punjab, and because this province is already overcome by the worst energy crisis, these units have not been in a position to avail import of duty-free raw material, with a view to avoid delay in export orders, as audit of DTRE takes up to six months. He appealed to the government to also proactively deal with the ongoing energy crisis and other issues to avert industrial closures and resultant economic downturn.

He said that the power shortage had not only caused unrest among the businessmen but it was depriving country of 2 per cent of much-needed GDP with an impact of Rs52 billion per annum on revenue generation and if seriousness is not shown practically, it is not the industrial production alone but all economic activities will come to a grinding halt in totality.

Mr Usman expressed his dismay over the government’s inability to tackle power crisis in its over four and half years’ tenure, and pressed upon the policy makers for implementation of a result-oriented mechanism.

He said that circular debt, electricity theft, fast increasing line losses, inefficiencies of government-owned generation and distribution companies; overstaffing; free provision of electricity to the tune of Rs100 million a day; poor maintenance of plant equipment; the use of obsolete technologies need to be tackled head-on and without any further loss of time. He also urged the government to ensure equal supply of electricity throughout the country as the province of Punjab was worst hit and investment scenario has totally spoiled in the province.

Mr Usman also stated that Auto engineering industry is totally different from other sectors, which is very sophisticated and complex and DTRE rules cannot be implemented to it. So, the goverment, keeping in view of the complexity of the auto sector, should align the rules of DTRE as per its requirements to give a jump start to the export of automotive parts, he concluded.

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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