ISLAMABAD, Nov 5: The chairman, National Tariff Commission (NTC), Dr Faizullah Khilji on Tuesday directed the electronics industry to specifically submit a time-bound plan for dispensing with dependency on tariff protection within the shortest possible period.

While chairing a public hearing held at NTC to consider the request by Carrier Telephone Industries (CTI) for reduction in duties on the raw materials and components of electronic systems, he said the protection sought by the industry could not be given for an indefinite period.

The applicant-industry was represented by its General Manager (Commercial), Shahid Hasan, who explained CTI’s case for reduction of tariff on raw materials to zero and that on components, modules and sub-assemblies to 5 per cent. The hearing was also attended by the senior executives of Siemens, Alcatel and Pakistan Telephone Industries. These units endorsed the contentions of CTI.

Nurtured on protections over the years, NTC Chairman remarked, the electronics industry must realize that the time when the tax concessions were used as a perennial instrument for protecting industry from external competition had changed.

The commission was in favour of the industry, particularly, high tech industry as per policy of the government, but it must realize that it had to stand on its own feet by reducing their costs and making their operations more efficient.

Dr Khilji recalled that a year ago, the electronics industry had approached the commission for increase in tariff on finished product and now they had come with a request to reduce tariff on components.

There was, however, little improvement. This was evident from the fact that in an electronic product priced at Rs1 million, the total value-addition was no more than Rs40,000. It was Rs23,000 on another system which cost Rs1.7 million. This meant that the local industry was assembling only imported components. The element of creativity, it seemed, was totally missing from the manner in which local industry worked.

To a question, an Alcatel official admitted that his transnational corporation has employed not a single software engineer in Pakistan. In that sense, its contribution to high tech-job creation in this country was almost nil.

Equipped with costly equipment though, the organized industry was hardly different from the informal sector, which assembles computer systems in their small workshops and sold them very cheap to the public.

Responding to a suggestion to inspect the CTI and TIP, he directed that the Engineering Development Board be asked to examine their plants and report on the quality of their products.

The NTC chairman also wondered about the reason for the local industry’s inability to compete with foreign competitors. For what they paid to their software engineers was only a fraction of their emoluments in other countries including Malaysia. Countries like China and Malaysia entered the sphere of high-tech after Pakistan, but they were far ahead of Pakistan today, he noted.

It appeared from the plea for tariff protection, he added, that the local industry had no interest in making themselves competitive and entering the export market. This was, however, possible only if they brought efficiency in their functioning. All they wanted, instead, was to reduce the domestic market into a captive market, he added.

The NTC, Dr Khilji stated, would recommend their request for relief in duties on components, etc., only after they suggested the period for which they wanted protection and how they planned to stand on their own feet after a reasonable time