The tyre industry has requested the government to provide a level playing field by curbing smuggling through the Afghan Transit Trade (ATT) system and re-evaluate the import trade price (ITP).
New possibilities are emerging for the tyre industry following the recovery of Pakistan’s automobile sector, however, the issues of smuggling and low ITP continue to act as major obstacles to businesses in the sector.
In a statement on Monday, General Tyre and Rubber Company Chief Executive Officer Hussain Kuli Khan termed it good news that renowned vehicle companies were choosing Pakistan to establish their assembly plants while many foreign tyre manufacturers entered into joint ventures with their Pakistani counterparts.
“In such circumstances, the future of Pakistan’s automobile sector and allied industries looks vibrant,” he said. “The tyre industry will prepare itself to meet the growing demand for tyres in Pakistan.”
However, the growth of local tyre manufacturing segment depended on government’s actions aimed at curbing smuggling and under-invoicing, he said.
The CEO added that efforts of the leadership over the last six months proved that it could be achieved but there needed to be a will to keep the success in place. New players in the automobile sector have caused diversification of the tyre manufacturing segment by increasing the demand for wheels of different sizes.
Following the launch of crossover cars and SUVs by different brands, the development of first 18-inch tyre has been initiated by domestic companies, which will be useful for large vehicles.
Highlighting the economic crisis triggered by the Covid-19 pandemic, he said that just like other industries, the tyre segment endured a dent as well. “Imposition of lockdowns and mobility restrictions coupled with the initial economic worsening strongly impacted the tyre sector,” he said. “It was difficult to predict when tyre manufacturers would recover from the losses, but timely assistance from the State Bank helped the economy rebound.”
Khan emphasised that the government could help the tyre segment by formulating and executing sustainable long-term policies.
He said that the annual consumption of car tyres in Pakistan stood at 10 million, which did not include tyres for heavy vehicles and motorcycles. The tyre industry meets 18-20% of the country’s demand while imports account for 15% and the remaining is filled by the undocumented and smuggled tyres, he said.
“It is a known fact that massive smuggling is taking place through the Afghan Transit Trade mechanism,” he pointed out.
Published in The Express Tribune, March 30th, 2021.
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