Apparently unhappy over the government’s long term policy outlined by Jehangir Tareen,the federal industries minister, in a meeting, the four big foreign auto assemblers have demanded adequate protection against the import of re-conditioned cars and auto parts, manufactured locally. They have also demanded that the new investors in auto assembling should be asked to commence their business from the deletion stage where the existing assemblers have reached.

“The proposed policy will discourage new investment and create unemployment,” the four auto assemblers -–Pak Suzuki, Indus Motors, Honda Atlas and Dewan Farooque—warned in a joint petition to the minister, informing him of their future expansion and investment plans up to 2011-12 when they intend to produce 516,000 units, employment opportunities for 13,900 persons and Rs103 billion taxes to the government.

Pointing out that the proposed government policy has created “a lot of uncertainty”, the auto assemblers have sought clarifications so that their plans of future investment and expansion are not derailed.
They have drawn the federal minister’s attention towards the proposal given by them on tariff-based system (TBS) with a long term auto policy for inclusion in government package to be launched with the 06-07 budget. This proposal, they maintained, provides a transparent level-playing field to all—the new entrants as well as the existing ones. It is essence of the TRIMS as outlined in WTO rules.
But the proposed government policy outlined in the meeting, the assemblers contended, negates the basic premise of the TBS which is transparency and uniform application of rules.
In the absence of any reward for localisation, the new entrant will continue with a strategy of least localisation for three years and may subsequently phase out the model.
The government indicated to the auto assemblers about moving away from the penalty-driven localisation policy to a policy which is being termed as incentive-based that offers returns for local value addition and exports of auto parts and completely built units (CBUs) from Pakistan.
In the proposed new policy, any new entrant, who introduces new models, or if the original equipment manufacturers (OEM) bring new platform, they will have the relaxation on the localisation by way of import of 100 per cent CKD at the CKD duty rate as an incentive for three years after which TBS will apply.
The government also declared to gradually reduce over a period of three years the custom duty, as proposed by the auto industry of 50 per cent on A-max parts. The CKD duty will be reduced further after three years for all the OEMs

The government of Pakistan is a keen pursuer of bilateral trade and investment agreements. It has a full FTA with Sri Lanka, a PTA with Turkey, Early Harvest Schemes with China and Malaysia, and is part of both ECOTA and SAFTA. It is in various stages of FTA talks, or preparations for talks, with Indonesia, Jordan, Thailand, Malaysia, Singapore, the Gulf Cooperation Council and Russia (among others). In July 2006 it signed a Framework Agreement on Trade with Mercosur.

Negotiations on a US-Pakistan bilateral investment treaty, as a step towards an FTA, have been quite problematic — and controversial — and are unconcluded.

ISLAMABAD (September 10 2006): The government has said that a long-term auto industry development program would be finalised soon following productive discussions with the stakeholders.Talking to Business Recorder, Engineering Development Board (EDB) Chief Executive Officer Imtiaz Rastgar said the plan has been prepared keeping in view the long-term needs of the industry which give eight-year clear road map for investment.
The demand for long-term auto policy has been fulfilled in the form of new plan, which not only gives a clear timeframe but also tariff structure for about eight years to the industry for expanding their units.
To a question about a policy for new entrants, he said the rules are being prepared and government wants to open the doors for new investors in the auto sector. The new entrants in the automobile sector would create competition, he added.
Meanwhile, it was learnt that the comments on new plan are yet to be received from the industry which was earlier sent to the manufacturers for their inputs about one and half months back.
The plan was sent to the industry in July after Prime Minister Shaukat Aziz had given a go-ahead signal and constituted a committee for negotiation with the industry. The prime minister was also given a detailed briefing on the auto program prepared by the EDB.
Planning Commission Deputy Chairman Dr Akram Sheikh is heading the committee, while Industries and Production Secretary Kamran Rasool and Central Board of Revenue (CBR) Chairman Abdullah Yousaf are the members.
Under the plan, manufacturers will be given a target of producing 0.5 million cars and one million motorcycles by the end of 2010-11 for which the government would provide all-out support to the industry.
The total car production till May 2006 is 143,921 against the total sale of 140,071, whereas the production of motorcycles, according to EDB officials, stood at 600,000. However, the industry has been demanding for reduction in depreciation allowance from 2 to 1 percent and at least three-month registration mandatory at the person’s name prior to importing a car under transfer of residence scheme.

[Source:brecorder]

The Indian automotive sector is looking at big opportunities in Pakistan should the direct shipment linkages between the two nations be established.
Industry bodies in India said that if direct shipment linkages between the neighbours are opened up, the automobile industry in Pakistan will move into a ‘virtious cycle’ from the current high-cost, low-demand vicious cycle.
The automobile industry in Pakistan is today heavily dependent on high cost inputs from Japan. Leading automobile players like Suzuki, Honda, Toyota and Nissan have already established presence in Pakistan, but suffers from low level of localisation.
A recent survey done by Associated Chambers of Commerce and Industry of India (Assocham) has come up with an estimated business of Rs 100 crore by 2010 for the on the auto component sector.

All the Assocham’s constituents that sent in their responses on a random survey conducted on ‘’Prospects of Indian Auto Component Exports to Pakistan’ Post-JBC Take-off’ were of unanimous view that direct shipment linkages will be established between Gujarat and Karachi which will have twin benefit for Indian auto component manufacturers as their direct exports will become cheaper by one third and will also open up gate to facilitate their component exports to Afghanistan via Pakistan.
The Automotive Components Manufacturers Association however pointed out that apart from the benefit that will accrue to the local component industry in India, the direct trade linkages will help in reducing the cost of automobile in Pakistan.
An ACMA (Automotive Component Manufacturers Association) offical said, ‘Today the automobile industry in Pakistan is heavily depended on high cost imports from Japan.
Opening links with India will go a long way in cutting cost and also getting technology into that country.’

Pakistani Prime Minister Shaukat Aziz said the government is taking steps to promote engineering industry by diversifying its base and producing value added products, according to local private Geo TV report. Presiding over a meeting here Tuesday to review the performance of Engineering Development Board (EDB) and development of engineering industry in Pakistan, Aziz said that the steps taken by the government have paved way for a dynamic engineering sector in Pakistan to facilitate capacity and production.

He said that Pakistan is becoming a regional hub for production and trade activities because of its geographic location, availability of skilled labor and the business friendly policies of the government.

He said the engineering sector should focus on modernization and innovative technologies to improve the quality and competitiveness of locally manufactured products. Aziz said that the market demand for cars has expanded to 200, 000 cars. Local production of cars have gone up to 160,000 in 2006 from approximately 80,000 cars manufactured in 1999. Pakistan, which was manufacturing 90,000 motorcycles in 1999, is today producing 650,000 motorcycles.

The auto mobile sector showed a growth of 30 percent last year. Several parts manufacturing companies have set up their plants in Pakistan.

The prime minister said that expansion in auto industry has led to a substantial increase in employment generation. The industrial sector has employed 190,000 people so far.

Source: Xinhua

ISLAMABAD: In a new development, Pakistan is going to hold secret talks to make some changes in the existing Free Trade Agreement (FTA) with Sri Lanka on September 28-29 in Colombo which has already been operational since June 2005.

Pakistan fears that under existing FTA Indian products can enter Pakistan’s market through Sri Lanka particularly India automobile parts, Daily Times has learnt.

“The commerce ministry had earlier extended some concessions to Sri Lanka under operational FTA on the import of spare parts of automobiles under the clause of margin of performances.

Likewise, Pakistan also allowed the import of PVC raisin from Sri Lanka under the existing FTA. Now the government has decided to take back the said concession under the clause of margin of performances from Sri Lanka.,” a government official told Daily Times.

The official said that since the Ministry of Commerce did not take the concerned stakeholders on board while deciding the concession items’ list with Sri Lanka. Now the stakeholders particularly the automobile sector had feared Sri Lanka will export the Indian automobile parts in Pakistan, as Sri Lanka has FTA with India also.

This will hurt Pakistan’s automobile sector which is highly protected in Pakistan. Joint secretary Shahid Bashir, who was earlier head of the negotiating team during the process of finalizing existing FTA with Sri Lanka, will again negotiate for amending the FTA on September 28-29 in Colombo.

Since this was the first-ever FTA that Pakistan has inked so there can be made some mistakes. However, the official said that Pakistan hopes that Sri Lanka would agree during the two-day talks to amend FTA as per the wishes of Pakistan’s stakeholders. He said that trade had begun under the FTA since June 2005, but the margin of performance clause is not enforced so far.

He said the trade under the primary items’ concession list was under way. However, automobile parts and PVC raisin are included in late items’ concession list, under which the trade of the said items has not kicked off so far.

He said that when the stakeholders in the automobile sector was provided with the FTA copy, they moved the government saying the negotiating team headed by Shahid Bashir had made blunders in extending the concession to Sri Lanka of automobile parts as it would hurt Pakistan’s local industry. Pakistan fears that Sri Lanka will export Indian automobile parts after some value addition to Pakistan and it will inflict huge injury to the local industry.

[Source:Daily Times]

LEAD: The Toyota Motor Corporation, Japan’s largest automobile maker, said it would build a car manufacturing plant in Pakistan by early 1993. A Toyota spokesman, Yoshiharu Tateishi, said the plant could produce up to 20,000 cars a year. He said about 3,000 Corollas would be produced in the first year, with production increasing later to 10,000 a year.

The Toyota Motor Corporation, Japan’s largest automobile maker, said it would build a car manufacturing plant in Pakistan by early 1993. A Toyota spokesman, Yoshiharu Tateishi, said the plant could produce up to 20,000 cars a year. He said about 3,000 Corollas would be produced in the first year, with production increasing later to 10,000 a year.

Japanese car maker Honda has held a special event at its assembly facility in Pakistan to reveal plans of an investment of $26 million to double production of its Civic and City models in the western Asian country. 

The special event, referred to by Honda as a “Manufacturing Capacity Expansion ceremony” was hosted by its Pakistani joint venture company, Honda Atlas Cars (Pakistan) Ltd. (HACPL) and was attended by dignitaries and guests including Pakistan Prime Minister Shaukat Aziz. 

To meet ever-increasing demand for automobiles in Pakistan, where economic growth continues, HACPL will increase production capacity by expanding plant facilities and upgrading welding and painting equipment. The annual production capacity will be doubled from the current 25,000 units to 50,000 units by the end of 2006. According to Honda, total investment for this expansion is expected to be approximately Y2.9 billion yen ($26.85 million). 

“Honda has been building a long-term partnership with Pakistan ever since we began motorcycle business here in 1960s, and Honda would like to continue making a contribution to the economy and society of Pakistan,” said Mr Satoshi Toshida, COO of Asia/Oceania Regional Operations for Honda Motor Co., Ltd. 

The automobile market in Pakistan reached 133,000 units in 2004, more than double the market size three years ago in 2001. Sales of the Honda Civic and City models continues to grow and total sales from January through July this year reached approximately 18,000 units, a 90% increase compared to the same period a year ago. 

Honda Atlas Cars (Pakistan) Ltd. (HACPL), Honda’s automobile production and sales joint venture in Pakistan, today held a Manufacturing Capacity Expansion ceremony of its auto plant. The ceremony was attended by dignitaries and guests including Pakistan Prime Minister Shaukat Aziz, Federal Minister for Industries and Production and Special Initiatives Jahangir Khan Tareen, and other high ranking state government officials.

To meet ever-increasing demand for automobiles in Pakistan, where economic growth continues, HACPL will increase production capacity by expanding plant facilities and upgrading welding and painting equipment. The annual production capacity will be doubled from the current 25,000 units to 50,000 units by the end of 2006. Total investment for this expansion is expected to be approximately 1.67 billion rupee (approximately 2.9 billion yen/1 rupee = 1.74yen).

“Honda has been building a long-term partnership with Pakistan ever since we began motorcycle business here in 1960s, and Honda would like to continue making a contribution to the economy and society of Pakistan,” said Mr. Satoshi Toshida, chief operating officer of Asia/Oceania Regional Operations for Honda Motor Co., Ltd.

The automobile market in Pakistan reached 133,000 units in 2004 - more than double the market size three years ago in 2001. Sales of the Honda Civic and City models continues to grow and total sales from January through July this year reached approximately 18,000 units - a 90% increase compared to the same period a year ago.

[Source:findarticles.com]

 KARACHI: Chairman Pakistan Automotive Manufacturers Association (PAMA) Kunwar Idrees has advised automobile assemblers to offer consumers a better deal in shape of improved quality and low prices.

Speaking at a dinner hosted by Pak Suzuki Motor Company to bid farewell to outgoing Chairman and Managing Director, Y Suzuki and to welcome new chief, Kenichi Iyukawa the other day, the PAMA chief said that auto assemblers were given a good response by consumers and government too had provided tremendous support to them and now it was auto assemblers’ turn to reciprocate in the same manner.

Kunwar Idrees lauded the role of Pak Suzuki in establishing the automobile sector in Pakistan.

Outgoing Chairman Y Suzuki said that Pak Suzuki had regained its leading role in the automobile sector of Pakistan and added that Suzuki Mehran had emerged as the most popular and top-selling passenger car in the country.

New Pak Suzuki Chief, Kenichi Iyukawa, in his address, hoped that his company would break previous records of sales and production in the years to come. He assured that his company would enhance Suzuki Motor Company’s stake in Pakistan in the shape of more investments.

Vice Chairman Pakistan Automobile Parts and Accessories Manufacturers Association, Mehdi A Rizvi and Pak Suzuki’s Director Admin and Personnel, Major (Retd) Sagheer Ahmed also spoke on the occasion.

[Source: Jang.com.pk]