KARACHI: Pakistan Automotive Manufacturers Association (PAMA) demanded of the Customs authorities to withdraw almost 400 percent concessions to commercial importers on motorcycle parts.
In a letter to Director General Customs Valuation, PAMA Director General said the recent valuation ruling 685/2014 September 15, 2014 was enforced without taking Original Equipment Manufacturers (OEMs) on board.
The new Import Trade Prices (ITPs) 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-valuated ITPs of motorcycle parts giving commercial importers huge concessions up to 400 percent against the values determined for 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 were using these low-valued parts for assembly, a local auto part manufacturer said.
The manufacturer said there was no need of this revaluation because the official prices of aluminum alloy set by London Metal Exchange have increased, so it was beyond comprehension why the Customs decreased the ITPs to such a level whereas they should have increased the ITPs instead.
The local parts manufacturer cannot survive because their process of aluminum made parts include material cost, hardening and casting, machining, testing, assembling and overheads/profit margins.
There are more than 60 active motorcycle manufacturers in the country who are directly affected by this decision.
The comparison of prices of parts after the Customs valuation clearly suggested carburetor would have 177 percent devaluation in price for commercial imports against the OEMs’ prices of the said component.
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 the price difference for both branded and non-branded parts might 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 Government revenue but will also help encourage investment, increase employment and will save valuable foreign exchange.
