Bid to import all motorcycle parts at zero duty: industry perturbed over Yamaha's manoeuvres

Motorcycles industry experts are intrigued by the manoeuvres of a Japanese manufacturer to obtain extraordinary concessions as a new entrant in motorcycle industry even after being a significant player in Pakistan for decades.
According to industry sources, Japanese investors from Yamaha have been meeting various government functionaries to obtain undue concessions, and their efforts seem to be getting positive response from the government despite strong protests from local industry.
The recent series of meetings in Islamabad has sent jitters among local motorcycle manufacturers and auto parts manufacturers. Local auto vendors are particularly hurt as they have worked hard to achieve over 90 percent deletion in the production of motorcycles. "A meagre foreign investment of $150 million, spread over a period of ten years, does not warrant permission to allow import of all motorcycle parts at zero duty, as demanded by the investor", said one vendor.
Chairman of Pakistan Association of Automotive Parts Accessories Manufacturers (PAAPAM), Amir Allawala, termed the deal with Yamaha as highly controversial, saying that Yamaha by no means is a new entrant since it already has a plant in Pakistan, and only the licence of the manufacturer was cancelled. In fact, three models of the company are still being produced in Pakistan--Yamaha Royal, Yamaha 4 and Junoon.
He said that there is no justification to allow additional concessions in the presence of 'New Entrant' policy in the Auto Industry Development Plan (AIDP). "Allowing Yamaha as a new entrant is going to pressurise thousands of motorcycle vendors to lay off 100,000 workers associated with the vendors," he warned.
He said that most of the high tech components, like engine and electrical items, are already manufactured in Pakistan to the complete satisfaction of the foreign brand principals. Even various high tech car components have been successfully localised under the government's indigenous policy and only a few components like carburettors and EFI are being imported at 15 percent duty.
Another vendor unveiled that the investor is possibly going to import 'completely knocked down' (CKD) kits from China, but would claim Japanese charges, which is totally unfair. He said that local manufacturers are currently producing over 1.4 million motorcycles and they are being sold at cheaper prices than Japanese brands.
"The latest proposal from the Japanese company has sought more subsidy than the proposed investment over a ten-year period", said Mansoor Abbas, an executive member of PAAPAM. Yamaha is seeking a duty-free status, with no localisation requirement, whereas the other industry members buy 90 percent of the components from local vendors and pay an average tariff of around 15 percent on imported parts, Abbas said.
The current players--from Italy, China and Japan--are also in various stages of developing new models in the 100-150 cc range with the latest technology, he said. They were, however, not offered any relief ever on the import of the environment-friendly Euro 2 components, which have already been introduced.
He said that the existing players rightly feel that they are being deprived of this subsidy thereby creating two policies in one industry. He said that the main loser would be the auto parts vendors, and d there is no justification in allowing imported motorcycle parts at zero duty, which are being produced in Pakistan. "Every country provides some protection to its industry, while we intend to facilitate the importers", said another vendor.