KARACHI: The Directorate General of Customs Valuation has given big concessions to commercial importers in determining value of motorcycle parts and accessories.
The local auto engineering industry, especially the auto part makers, are shocked over the move that hurts the interest of the local industry.
The valuation ruling of September 15, 2014 regarding motorcycle parts of Chinese origin by the customs re-evaluated the import trade prices (ITPs) of motorcycle parts, giving price advantage to importers that in some categories it becomes four times cheaper than the value determined for local assemblers.
Bike manufacturers asserted they were not consulted before finalising the ITPs of parts and accessories. In his opinion the laid down procedure of re-evaluation of ITPs was circumvented to appease certain traders. He insisted that the revised prices are less than even the price of raw material used to make these parts.
This has been done at a time when the prices at London Metal Exchange (LME) are showing a rising trend.
For example the official price of aluminium alloy has appreciated by more than 13 per cent during March 2014 and September 2014.
A auto part maker told Dawn that a spark plug imported by manufacturer is priced at $0.50 per piece but a commercial importer can get it for $0.12 per piece. Similarly, a CDI Unit will cost a manufacturer $0.80 per unit but $0.19 per unit to a commercial importer.
He said this policy would push auto parts manufacturers out of business as they cannot compete with under-priced products when the process of aluminium made parts include material cost, hardening and casting, machining, testing, assembling, and overheads/profit margins.
He suspected that the customs took this decision on a petition filed by All Pakistan Motorcycle Parts Importers and Dealers Association.
The comparison of parts’ prices after the customs valuation clearly suggests that carburetor will have 177pc devaluation in price for commercial imports against the OEMs’ manufactured prices of the said component. CDI unit will have 321pc devaluation; cylinder head will have 146pc; ignition coil 123pc; insulator carburetor 206pc; main shaft and counter shaft 227pc; magneto 154pc; piston 155pc; rectifier regulator 197pc; ring for piston 150pc; spark plug 317pc; and valve inlet/exhaust 400pc.
Meanwhile, the assemblers’ body Pakistan Automotive Manufacturers Association (PAMA) has urged the customs authorities to immediately take back this decision as it will shrink already small manufacturing base.
PAMA said the customs authorities should know that the price difference for both branded and non-branded parts may not be more than 25 to 30pc as the same material, same machine, and same process are being used in manufacturing of the part.
Published in Dawn, October 10th, 2014
