The Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) has stressed the need for providing level-playing field to the tractors’ Auto parts manufacturers through restricting import of those parts which are being manufactured in the country, as under-invoicing and low valuation of imports have been hitting the industry hard.
In a statement issued here today, PAAPAM senior vice chairman Abdur Razzaq Gauhar invited the attention of the FBR Chairman towards this big menace of lower value determination of imported tractor parts at the Directorate General of Customs Valuations on behest of traders’ lobby. He said that undervaluation of imports by the Customs Authorities are turning the country into a trading hub by favoring commercial importers on one hand while on the other affecting collection of federal taxes at the import stage.
He said that low valuation of tractors parts imports have adversely affected sales tax, withholding tax, customs duty and Federal Excise Duty and the major reason of less revenue collection is the absence of foolproof mechanism for accurate assessment of duties and taxes at the import stage.
“PAAPAM appreciates the recent increase in valuation of tractor parts but it is very meager against the values determined for Original Equipment Manufacturers (OEMs) and still below the rates of even raw materials,” he pointed out.
“Moreover, this is very small increase in valuation of parts which was done after a long struggle of the manufacturers but our problems were not yet addressed fully because these rates are still much lower than the actual value in the global and local market. Even the increase in locally manufactured alloy steel of over 30% in last six months is much higher than the meager increase allowed in valuation.” he added.
Abdur Razzaq Gauhar said that nominal improvement in valuation of just 5-10 percent parts are meant for only aftermarket and not for tractor assembly and does not affect the tractors price, he pointed out and added that it is false plea and wrong propaganda of the traders’ lobby.
He made it clear that low valuation has no impact on tractor parts prices in the aftermarket as there is no benefit passed on to the end customers rather the traders enhance its profit margin through this tool.
He said that tractor prices are not affected due to proper valuation of parts, as 90-95 percent parts of Pakistani tractors are localized, proudly being the highest indigenized vehicle. Moreover, all the non-localized tractor parts are imported on zero duty under the EDBs deletion program.
“These all parts are being made locally and there is no justification to import those at all,” he warned.
Abdur Razzaq Gauhar observed that Pakistan is a big market of tractor parts but instead of providing incentives to the local industry country is being turned into dumping yard of substandard parts from India and China.
“There is a dire need to protect the local industry which is not only one of the largest sources of revenue for the government but is also providing employment to the millions of people. The government should give safeguard to the local manufacturers and strictly discourage the import of those items which are being produced at domestic level,” he demanded.
He also called for a check on smuggling, which is being done in a number of shapes like under-invoicing, undervaluation of goods, misclassifications, falsification of documents, miss-declaration of country of origin and short landing transit or re-export of goods.
The leader of auto parts makers suggested that a special committee consisting of officials from FBR, Engineering Development Board, representatives of PAMA and PAAPAM be formed to suggest measures for eradication of this malpractice, and for ending the influence of commercial importers, in order to safeguard the country’s revenue collections.
“We fully support availability of quality parts at economical prices for the consumers in Pakistan, but its solution does not lie in duty reductions through low valuations at the cost of government revenues and the industrial base of the country,” he added.