New tariff system yet to be made effective: Automobile sector
By Aamir Shafaat Khan
KARACHI, Nov 30: The government is yet to issue a notification on the Tariff Based System (TBS) for the entire automobile sector despite its approval by the board of management of the Engineering Development Board (EDB) in October 2004.
EDB and Industry Ministry officials had been tight lipped on the TBS issue for the last one year, thus putting the entire auto sector especially the new entrants in a state of confusion.
EDB Coordinator Javed Akhtar Paracha had told Dawn in early December 2004 that the TBS system would be introduced in January 2005.
Auto sources said that despite approval by the EDB board of management in October 2004 in the meeting with Dr Akram Shaikh in the chair, the EDB management is now reported to have reopened the TBS issue with the auto sector people.
In the last one year the EDB has been arranging various meetings with the stakeholders of the automobile industry, but it has failed to finalize the TBS so far.
Sources said that some leading car makers had been trying hard to change some of the rules which were approved in October 2004. They think that the different levels of achievement in various categories, frequent model changes and new products pose a higher level of difficulty in the implementation of the TBS.
Some of the approved principles of the TBSs were:
Imports in CKD conditions allowed only to assemblers being adequate assembly facilities and registered as such by the federal government agency concerned.
Category wise lists of parts importable in CKD kits to be defined in the notification and import of these allowed at a lower rate in the tariff (35 per cent) not indigenized by any original equipment manufacturers (OEMs).
Category wise list of local parts not importable by OEM directly or through vendor by recognized assemblers to be notified, and imports of these to be allowed at higher rate of duty on CBU or 50 per cent whichever is higher in the tariff book.
Uncommon parts list to be notified. Initially, import of these parts is to be allowed. This list is to be gradually eliminated in a period of three years. Preparation of all these lists is to be carried out by the sub-committee of indigenization committee and to be finally approved by the indigenization committee.
List of parts selected from imports from the two lists one means (category wise list of parts importable in CKD condition) and the other means (common parts list) to be submitted by registered OEM to Customs Classification Central Committee (CCCC) having representatives from the CBR, EDB and technical staff of classification before affecting imports. Monitoring of import is to be done by CCCC.
List of parts intended to be locally procured is to be submitted to Automotive Training and Testing Centre (AT&TC) for their record and conformity with required quality. AT&TC is to ensure that OEM’s used parts have attained the required quality level.
New entrants to start by not importing parts that have been certified by AT&TC as locally developed quality parts. Any change to this list will require approval from the Economic Coordination Committee (ECC).
Similarly, the EDB is also not ready to clear the TBS for motorcycles in which all the new entrants are satisfied with the rules and regulations.
By November 2005, there are over 40 bike makers in which three are Japanese motorcycles makers (Honda, Suzuki and Yamaha). Sources said that the government takes notice of the suggestions by the Japanese makers instead of responding to the proposals of the majority of bike makers. Even the Pakistan Automotive Manufacturers Association (PAMA) has only five members including Sohrab and Qingci while other 35 members have their own associations of various names.
Auto sector sources said that not only the TBS had been delayed the EDB management had also been unable to look other issues. They said that the Board was not monitoring the deletion programme, while no new deletion targets were being set for new entrants. Car makers were importing what they wanted under the completely knocked down kits.
