The Pakistan Automotive Manufacturers Association (PAMA) has expressed concerns over the concessions given by the Customs authorities to importers of motorcycle parts over the manufacturing industry without any basis or justification. In a letter to the Director General Customs Valuation, PAMA said the recent valuation ruling No 685/2014 dated September 15, 2014, was enforced without taking Original Equipment Manufacturers (OEMs) on board.
The new Import Trade Price (ITP) regarding motorcycle parts of China origin by the Customs authorities has seriously endangered revenues to the government, OEMs' investment, employment base, and foreign exchange to the country. The Customs authorities re-evaluated the ITPs of motorcycle parts recently that gave commercial importers huge concessions of up to 400 percent against the values determined for Original Equipment Manufacturers (OEMs), said a source in the industry.
"These unrealistic low values of motorcycle parts for commercial imports have resulted in a situation highly dangerous to the local parts manufacturing sector as motorcycle assemblers are using these low-valued parts for assembly," added a local auto part manufacturer.
The manufacturer said that there was no need of this revaluation because the official prices of aluminium alloy set by the London Metal Exchange (LME) have increased, so it is beyond comprehension why the Customs decreased the ITPs to such a level whereas they should have increased the ITPs instead.
"The local parts manufacturers cannot survive this re-evaluation because their process of aluminium made parts include material cost, hardening and casting, machining, testing, assembling, and overheads/profit margins. The commercial importers did not have to go through this procedure, yet they got this much reduction in ITPs which is a big injustice to the local parts manufacturers," said the manufacturer. There are more than 60 active motorcycle parts manufacturers in the country who are directly affected by this decision.
The comparison of prices of parts after the Customs valuation clearly suggests that Carburetor will have 177 percent devaluation in price for commercial imports against the OEMs' manufactured prices of the said component.
Similarly, CDI unit will have 321 percent devaluation; Cylinder Head will have 146 percent; Ignition Coil 123 percent; Insulator Carburetor 206 percent; Main Shaft and Counter Shaft 227 percent; Magneto 154 percent; Piston 155 percent; Rectifier Regulator 197 percent; Ring for Piston 150 percent; Spark Plug 317 percent; and Valve inlet/Exhaust 400 percent.
The manufacturer said the Customs authorities should know that the price difference for both branded and non-branded parts may not be more than 25 percent to 30 percent as the same material, same machine and same process were being used in manufacturing of the parts. The letter said that positive efforts in this regard will not only increase the government revenue but will also help encourage investment, increase employment and will save valuable foreign exchange.
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