Govt urged to reduce duties on motorcycle parts

High rates of duties, taxes encouraging smuggling

KARACHI:

In the backdrop of import restrictions placed due to low foreign exchange reserves, the widespread smuggling of motorcycles parts is hurting the economy.

Traders of motorcycle parts have urged the government to reduce custom duties and other taxes to protect the industry and discourage smuggling.

“We request the Karachi Chamber of Commerce and Industry (KCCI) to take up this important issue with the relevant policy-makers in Islamabad so that custom duties and other taxes can be reduced,” All Pakistan Motorcycle Spare Parts Importers and Dealers Association (APMSPIDA) Chairman, Nasir Maqbool said while heading a delegation to the KCCI.

Speaking on the occasion, Maqbool stated that “although many importers of spare parts have established small manufacturing units so they can locally manufacture various imported items, the raw material required to manufacture these spare parts has also been blocked under Customs Tariff Section 84 and 85, which needs be to revised.”

“Exorbitant customs duty of 35% along with 11% additional duty and other levies were having an overall impact of increasing the cost of imported spare parts of motorcycles by around 90%. This is making motorcycles more expensive and beyond the reach of the poor segment of society,” he lamented.

Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) former Chairman, Abdul Rehman Aizaz noted that, “95% of CD 70s and over 87% of CG125s are locally produced. However, there is huge under-invoicing in auto parts including two-wheeler parts.”

“No part seller is interested in paying the sales tax to manufacturers. They prefer low quality parts from the cottage industry without paying sales tax. The need of import is very little in any case,” Aizaz explained.

Endorsing the Aizaz’s viewpoint, Ismail Iqbal Securities Auto Sector Analyst, Muqeet Naeem said, “Local parts are being used in over 90% of CD70s manufactured in Pakistan, but for higher-end bikes the usage of local parts is not optimal.”

KCCI President, Mohammad Tariq Yousuf advised the importers of motorcycle spare parts to “Set up their own cottage industries to manufacture the various spare parts being imported. It is no longer feasible to import these parts because of the uncertain situation created by currency fluctuation.”

Yousuf stressed that “Setting up small industries for manufacturing spare parts was the only solution to most of the problems being faced by traders including exorbitant custom duties, delays in clearance of consignments, heavy demurrage, detention losses and high cost of imported goods due to the rising dollar value.”

 

Published in The Express Tribune, October 19^th, 2022.

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