MFN Status: Automobile industry assured of protection in liberal regime
The government has assured auto parts manufacturers that the domestic industry will be protected and a negative list will be maintained in trade with India despite recent moves to further open up commerce between the two countries, a stakeholder in the auto industry said.
“The automobile industry is satisfied with the assurance given by Secretary Commerce Zafar Mahmood,” said Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) Chairman Syed Nabeel Hashmi.
Speaking to The Express Tribune over phone on Saturday, Hashmi said Paapam and the secretary commerce had held a series of meetings in which a committee was formed to finalise a negative list for the auto industry.
The negative list contains items on which the government imposes import duties to protect the local industry.
“We have to shield our industry and develop it in the long run. This is why we prefer to adopt a go-slow policy as far as trade liberalisation with India is concerned,” Hashmi said. “Later, when we develop our industry, we will open it up to India to compete freely.”
The auto parts makers have asked the government to restrict the import of finished auto products from India to enable them to develop the industry with joint ventures and technical collaboration with Indian companies.
“Only then, we can compete with Indian auto manufacturers who have big economies of scale that help them reduce cost of production,” he said.
Hashmi cited costly raw material and low economies of scale for Pakistani manufacturers, which made their products expensive and rendered them uncompetitive.
The auto industry has welcomed trade liberalisation with India but it has some reservations about import of certain finished products which are also produced in Pakistan. They say if Pakistan imports the finished products, the growth of local industry will come to a halt.
However, they support the import of machinery and raw material and collaboration with the Indians in technical assistance.
Published in The Express Tribune, November 13th, 2011.
COMMENTS (8)
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The granting of MFN status to India, and the propsect of gradual opening up of trade is an opportunity for the automobile sector, and relief to the consumer. As an assembling hub for imported parts and some low-tech domestically produced cars, Pakistani auto consumers are a captive market for the 3 automobile assemblers in the country. In addition to lack of consumer choice, the manufacturers have displayed considerable pricing power - specially over the last couple of years. The sector has been protected since its inception; even half-hearted government attempts to foster competition through the import of used cars through back-door channels e.g. residence transfer schemes have been abandoned in the past. In my opinion, the opening up of trade with India is therefore an opportunity to overcome these barriers to consumer welfare - for protecting the producer per se cannot be a social welfare objective.
We in India are fully aware that how much our country suffered in development by the protectionist attitude. It is better Pakistan does not repeat the same mistake.
@SYED NABEEL HASHMI: If this is the case, then what is the problem? Afterall the products/parts manufactured by Pakistan auto industry compete in International market with Indian goods. Let them compete domisticall y too. What's so big deal about it?
I think it is about time our beloved, incompetent, over-priced, monopolistic, zero customer service driven car manufacturers face the wrath of International or Indian car companies. They have better cars, quality, better priced, better serviced while we pay our Manufacturers so much. Lets not talk about the leverage the industry has with the government by restricting the imports of used cars. Simply put buy a crap car for more that you can buy anywhere in the world.
Perhaps there is a serious confusion in understanding what PAAPAM is and what PAMA is. PAAPAM represents the interest of over 350 Pakistani Autoparts makers. This is the bulk of the automotive industry where employment and technology exists.
PAMA represents the Automotive OEM/Assemblers for cars, motorcycle, tractors etc.,.
PAAPAM will welcome if any VW or GM investments come into Pakistan. We look forward to any Assembler which invests in Pakistan with an inbuilt focus to tap the Middle East, CIS and of course Indian market also with components sourced from within Pakistan.
At the moment components produced by PAAPAM members are manufactured to the strict quality standards dictated by their customers which include TOYOTA, HONDA and SUZUKI. Generally "A" category components are certified in Japan.
PAAPAM members are also exporting Pakistan made Autoparts to USA and many European Union countries.
MFN vis-a-vis auomobile industry of Pakistan. It is very encouraging the stake holders as PAAPAM's chair Mr. Hashmi advocacy to the Honorable Secretary Commerce Mr Zafar. This is the case of the stake holder PAAPAM to defend the interests of the industry. Motorisation trend in the sub-continent is well known worldwide. India today is the largest outsourced country, market, and export for sub-compact cars in the world. At the in-augural ceremony of Nano the flagship car of Tata PAMA was also invited to participate at the International Motor Show, Delhi and with efforts from FICCI Federation of Indian Automobile Manufacturer Association the treaty of ATA carnet allowing tax free entry for display of cars was also endorsed, alongwith space for Pakistan automobile sector. This was ignored. Suzuki which is a family owned company Suzuki India led by Osamu Suzuki with the biggest operations in the world in India with major exports, market share and compliance to international standards on Quality Assurance QC in full adherence to JDP. Suzuki which sold its 30% to Volkswagon AG., is eyeing Pakistan for major investment. Mr. Hashmi will PAAPAM be able to to cater VW make the biggest investment in Pakistan, or General Motors per se. Toyota producing the worst quality of junk in the world to cater to the protected market of Pakistan. This was stated by Toyota senior officials in Japan about the worst quality or Corollas in the world. Despite the worst quality there was never a recall of defective cars in Pakistan. Because there is no effective consumer voice, and the rights of the consumer. Toyota was never able to export because of the worst quality of components being used. Honorable Secretary as per WTO, CCoP international rating agencies about quality control, this should be most essential the local produced cars should not go to the hands of the consumer unless it meets international quality control criteria binding upon safety, emission control, competetive pricing.Today environment friendly cars as hybrid, EV, Euro 3 and above has incentives for tax exemption incentive from the state. Your good office should have incentive for local manufacturer to produce car with quality control rating agency as in India Suzuki, Hyundai, and many others are following and enjoys exports, good market share. Pakistan will get carbon emission credit if they use Euro 3 standards, Hybrid engine based autos, and Electric Vehicle which are very easy. Suzuki is still dumping Euro 0 cars in Pakistan.
Not only automobile industry but everybody should use protection.
why our auto industry in fear, because it is incompetent .but a normal citizen doesn't care about it ,what he care is good quality automobiles in less price if indian companies r ready to provide,, our government and public should welcome them.! our auto industry has to compete with international players , our auto industry doesn't care of its costumers and it is increasing the price of its products of weekly basis ......so how can we support this useless sector ....1 more thing indian industry is fully dependent and making very single part in india while our industry is importing parts and assembling them in karachi ,,,,,