ISLAMABAD: The Auto Industry Development Committee (AIDC) has refused to relax deadline to purportedly slow-moving two new entrant companies’ M/s Dewan Farooq and Khalid Mushtaq Motors, well-informed sources told Business Recorder.
The decision was taken at a recent meeting of the committee, presided over by the Chief Executive Officer (CEO) Engineering Development Board (EDB).
According to sources, Secretary AIDC told the committee that Dewan Farooq Motors Limited started production in 2018; however, the firm could not continue due to various macroeconomic factors i.e. rupee devaluation, etc., according to their statement. The firm requested for extension of one year in their existing Brownfield expiry date of March 05, 2022. EDB argued that as per policy no such extension can be granted. The CEO, Dartways, said that the committee has to see the progress of the firm before Covid-19 situation arose and in case the firm has not shown any progress by that date then extension should not be given.
Secretary AIDC said that M/s Premier Motors Ltd. signed an agreement with Volkswagen, Germany to produce Volkswagen brand automotive vehicles in Pakistan. The firm’s CKD manufacturing as per their Business Plan submitted in November 2019 was delayed due to prevailing situation due to Covid-19/lockdown. Representative of M/s Premier Motors Ltd contended that their firm was not able to hold design review meetings, design approval and manufacturing release for the equipment with vendors and with their principle in Germany due to lockdown and travel ban etc. The firm was not able to proceed with construction at production site due to non-availability of labour during execution of construction activities. Therefore, the firm requested for an extension in its planned start of production date by nine months, i.e. from July 01, 2021 to March 31, 2022.
The CEO, Dartways, was of the view that cutoff date to start production is June 30, 2021 or within 2 years after signing the agreement whichever is earlier, adding that force majeure is needed to be considered. He argued that master document is policy not the agreement, underscores the need for following the ADP 2016-21. However, the relaxation, if any, should be analyzed on case to case basis.
The AIDC did not support any extension for M/s Khalid Mushtaq Motors and Dewan Farooq Motors Limited as the duo purportedly did not show any progress prior to Covid-19. However, EDB directed to analyze progress of M/s Premier Motors pre-Covid and put up status in next AIDC meeting for consideration.
Secretary AIDC also updated AIDC members that Pakistan Standard & Quality Control Authority (PSQCA) has formulated five standards for four wheelers and one standard for helmets. Standards formulation as per Pakistan Standards and Quality Certification Authority (PSQCA) Act 1996 comes under the mandate of PSQCA. The CEO EDB requested PSQCA to give a presentation on the issue. Ali Buksh Somroo, Director (Standards), PSQCA gave a presentation about their authority. He stated that standards developed by PSQCA are not mandatory. However once approved by Economic Coordination Committee (ECC)/Cabinet they become regulations and mandatory. He added that these six standards under discussion are going through the process to become regulations.
The Chairman PAMA and OEMs highlighted various concerns on the formulation of standards by PSQCA. The CEO, EDB highlighted that standards development is PSQCA's domain; however, they should be developed in consultation with industry. He said that reportedly due process as highlighted by participants does not seem to have been followed.
The Chairman PAMA and the Senior Manager, Indus Motor Company questioned the benefit of standards and added that marking fee will be pass on to consumers. The CEO, EDB asked whether the standards were adequately consulted. Ali Buksh Somroo said that the procedure is being followed and regulations have been circulated and consultation is under process.
The industry representatives including PAMA and non-PAMA members said that they have not received relevant information. The CEO, EDB requested PSQCA to circulate the standards to the industry and subsequently meet with them to complete the procedure of adequate consultation and deliberations.
The Senior Manager, Indus Motor Company, said eventually WP-29 will become mandatory that will attain the objective of quality and standardized vehicle. Marking fee will increase price of the vehicles. Ali Buksh Somroo said that countries like India and Turkey have both local standards and WP-29 regulations certified by their respective governments. He said PSQCA is not a revenue collecting department. The marking fee will be minimal as it is in case of food and non-food items.
The Chairman PAMA said that infrastructure is needed before implementation of standards, adding that implementation of standards without infrastructure and any benefit to consumers or industry is not understandable. OEMs follow the manufacturing standards of their principals. That is the prime reason M/s Millat Tractors was able to export tractors worldwide. He said the consumer has to pay for such additional regulations. The Senior Manager, Indus Motor Company, said WP-29 is a known language worldwide. The CEO, EDB said that mistakenly a wrong image of industry has been portrayed that it must cooperate with PSQCA and other relevant agencies of the government to address this. The Director PSQCA replied that type approval is to check quality. Conformity and Type approval can be discussed and PSQCA can go for type approval.
The CEO Honda Atlas Pvt Ltd said that helmet standards were made without consultation with local manufacturers and the industry is waiting to be involved in consultation process. Rules were not followed. The Director PSQCA said the standards are not developed on research and development; they are based on international standards, i.e., International Organisation for Standardization (ISO) CEO, Honda Atlas, said that a complete helmet industry can be created if a consultative process is followed for standards development, just like tyre industry development in India. He said that National Standards Committee does not include industry. The Director PSQCA said if locally developed standards World Trade Organization (WTO) requirements, WTO can raise objections which will be detrimental for Pakistan.
The CEO, Dartways, said that there are two main issues with industry - marking fee and confidence on PSQCA ability, adding that a way out should be found to resolve this issue.
The Secretary AIDC said EDB will forward its comments accordingly but PSQCA may circulate standards to the industry as EDB, OEMs, and industry are claiming that they have not received these. As per EDB’s view, system has not been followed. The CEO, EDB, said regulations should not be ‘forced’ but considered after mutual consultations. The Secretary AIDC said EDB is secretariat for WP-29 regulations as per ADP 2016-21 and PSQCA is the custodian for standards development.
The committee decided that EDB will provide a list of local manufacturers to PSQCA, which will convene a meeting of stakeholders for preparation of standards for auto sector, after prior circulation of the draft standards.
Copyright Business Recorder, 2020
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