KARACHI: The Engineering Development Board (EDB) is facing pressure from the Contractors Association of Pakistan (CAP) to allow imports of specialised vehicle mounted, heavy construction machinery and Euro II compliant vehicles older than five years for CPEC and other government projects.
Contesting CAP’s move, the local heavy industry said any changes in the policy at this stage would not only shatter the confidence of assemblers but also provide a chance for the new entrants to re-visit their decision of making investment in Pakistan.
In a meeting held last week in Islamabad, CAP informed the EDB officials and local assemblers that eight types of construction equipment are not being manufactured in Pakistan. The association maintained that its contractors should be allowed to import such equipment on remaining life basis or the age limit should be extended to 15 years from existing five years.
The eight types of construction machinery equipments which are not being assembled in Pakistan include dump trucks for highways (above five tonnes and Euro II emission standard), as well as Euro II compliant completely built units (CBU) such as prime movers trucks, transit mixer trucks, mobile cable crane, cement bulker truck, drilling specialised trucks and super swinger trucks conveys.
Local heavy assemblers informed the meeting that no relaxation in age limit should be provided in view of the Auto Development Policy 2016-2021. They urged the CAP members to consult local industry for the required vehicles/machinery.
Assemblers claimed that they make all types of trucks and prime movers while higher range has been produced on special orders and supplied to the National Highway Authority (NHA) and Frontier Works Organisation (FWO).
Earlier in a meeting held on Feb 12, 2018, Commerce Secretary Younus Dagha had decided that import policy based on remaining productive life would not be practical. The Ministry of Commerce is the custodian of import policy and has the final word.
However, in the March 13, 2018 meeting, it was mutually agreed that some equipment and machinery is not being manufactured locally but new PCT heading would be required to separately specify the equipment/machinery which is not being manufactured locally.
The following HS Codes in the Auto Development Policy (ADP) 2016-2021 are subject to age limit five years: prime movers (8701.2040), concrete mixer lorries (8705.4000), dumpers designed for off highways use (8704.1090) and others HS Code (8705.9000) including water sprinklers be maintained.
It was decided that CAP and local heavy vehicle assemblers would submit their proposals to the EDB for onward submission to the commerce ministry to be recommended for Budget 2018-2019.
The Pakistan Automotive Manufactures Association (PAMA) had informed the EDB that the Ministry of Industry held a meeting on Dec 5, 2017 in which it was agreed that CAP would share specification of above eight specialised vehicles along with annual estimated volume with relevant stakeholders including with ministry, EDB and the local industry. Representatives from CAP and EDB would visit the assemblers’ plants to discuss future cooperation between CAP and assemblers. PAMA alleged that CAP never contacted any government department or local assemblers. The CAP is only interested in importing used machinery which would hardly benefit the economy or to the revenue.
PAMA said dump trucks and cargo trucks in prevalent configurations and up to 375HP are being manufactured/supplied locally. With local production of Prime movers (4x2 and 6x4) up to 360HP supplies are also being made up to 375HP.
Talking to Dawn, a heavy vehicle assembler said ADP 2016-21 was launched in March 2016 to improve the current production capacity of local assemblers and provide incentives for new entrants. As a result, new entrants are now setting up plants in brownfield and greenfield categories.
Soon after the auto policy, many local group including importers of used commercial vehicles, became active and approached various ministries to make changes in the policy as per their need.
He said all required grades of vehicles are already in production in the country and major customers include Pakistan Army, FWO, NLC, cement and petroleum sectors.
The industry is already producing prime movers (87-01) up to 380 HP and may provide 420 HP ones too. Similarly dump trucks, crane mounted vehicles, concrete mixers in any capacity and numbers are also being provided to the customers.
He said importers may get either new or used machineries from abroad and install these equipments on the locally produced commercial vehicles. But importers want to import these machines and equipment along with the used commercial vehicles.
Before Auto Policy the so called special purpose vehicles along with the dummy equipment were coming in the country, he said, adding: “After clearance, the dummy equipments were removed and bare chassis were sold in the market.”
Sources said EDB is the custodian of ADP 2016-21 and unless and until it proposes changes in the policy, no ministry can move forward to make changes. EDB is bearing tremendous pressure from influential importers and CAP and the Board has no support from the Ministry of Industries under which it falls or from the Ministry of Commerce.
Published in Dawn, March 20th, 2018