If local manufacturers are willing to work with importers, we could together tackle smuggling to mutual benefit.
KARACHI: This is with reference to the story “Industry feels threatened by imported, smuggled tyres” (March 15). The tyre industry in Pakistan is in a serious state of crisis right now. While we (importers) share the concerns of the tyre manufacturers, we want our side of the story to be heard as well. No source has been cited for the statistics given in the story. The annual demand, the number of tyres imported and the quantity smuggled, all seem to have been conjured up by one manufacturer only, as the report points out. The manufacturer admits that its annual capacity is 2.1 million tyres and the local demand is 8.2 million. By its own account, the demand-supply (through local production) gap is, therefore, 6.1 million tyres and this excess demand has to be met by foreign-manufactured tyres.
Although we would prefer not to comment on the sweeping statement that the local manufacturers’ quality is much better than that of foreign manufactured brands, we are upset that the local manufacturer has requested that action be taken against imported tyres and not smuggled ones. We empathise with the local manufacturer as the local industry should be given preference, but it must be noted that Pakistan has failed to develop and market indigenous brands of its own. This is the fault of successive governments, which have failed to provide an environment conducive to such a huge investment that provides a fairly lucrative opportunity. This, however, does not justify that imports be curtailed while the country has barely enough capacity to satisfy demand.
Local manufacturers do not carry even the most common of sizes suited to the local market. They are also afraid to name and shame smugglers involved in misusing the Afghan Transit Trade (ATT), who bring in tyres without paying duties and other taxes. This is because of the influence the grey trade now peddles in the highest echelons of power, causing losses worth billions of rupees to the national exchequer.
The tyre importers are weak, disorganised and financially less capable of having their voices heard at the Federal Board of Revenue and other forums. However, if the local manufacturers were willing to work with the importers, we could together tackle the menace of smuggling to our mutual benefit, instead of hurting each other. This also brings us back to the first point we have raised above. The demand met by importers is not higher than that of smuggled tyres, and at this point, the quantity smuggled may be much higher than the quantity legally imported. If the government were to accept the local manufacturer’s suggestion of increasing the import value of Chinese and other foreign origin tyres, we would further lose ground to smuggled tyres. It is in our best interest, therefore, to team up and initiate a campaign to limit, if not completely eliminate, smuggling of tyres under the ATT into Pakistan.
We can then convince many local companies and foreign manufacturers to set up their plants as the government will be providing a level playing field and necessary protection to investments that will be worth approximately $300-400 million. We hope our suggestion reaches the manufacturers and they and the government pay heed to it.
Name withheld at the writer’s request
Published in The Express Tribune, March 20th, 2014.
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