Local tyre industry decries customs revisions

Says new import trade prices favour importers, demands level playing field

LAHORE:

Tyre manufacturers have stated that the Customs department’s unfair favouritism towards importers is hurting both the local industry and the national economy during these challenging economic times.

On September 9, 2023, the Customs Valuation department held a meeting to re-determine the custom values of Passenger Car and Light Truck Tyres under section 25A of the Customs Act 1969. The meeting was attended by the Pakistan Tyre Importers and Dealers Association (PTIDA), yet surprisingly, no representatives from the local tyre manufacturing industry were invited. The Customs Valuation Department approved the proposal submitted by PTIDA and revised the Import Trade Prices (ITP) through Valuation Rulings 1820 and 1821 without considering the opinions of local tyre makers.

Subsequently, local tyre manufacturers wrote a letter to the Director of Custom Valuation, drawing attention to this injustice towards the local industry in revising ITPs following the importers’ proposal, emphasising the importers’ limited contribution to the national economy. The letter questioned why the importers, who don’t invest in local manufacturing plants, should have such a significant say in tariff revisions.

The letter further mentioned that the latest revised ITP values for certain tyre sizes do not accurately represent the true picture, observing that in most cases, the ITPs are revised downward. It was highlighted in the letter that ITP values are designed to safeguard local industries that contribute to the nation’s economy by paying taxes, providing employment, and investing in advanced equipment to meet international quality standards, while supporting numerous vendors dealing with various raw materials associated with the local industries.

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The local tyre industry manufactures the main sizes of tyres in demand and accounts for over 75% of the total passenger car and light truck sizes. On the contrary, imported Chinese tyres are significantly under-invoiced. Over the past five years, the average annual import in Pakistan stood at 2.1 million pieces, representing an average growth percentage of 72% of the total tyre imports in Pakistan, while others accounted for merely 28%.

The industry has demanded a level playing field for local tyre manufacturers to ensure fair competition and allow the industry to invest in the latest equipment and machinery. This would boost production capacity, improve tyre quality to meet international standards, and potentially increase exports to earn foreign exchange for the country.

Published in The Express Tribune, November 14^th, 2023.

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