The Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM), led by Chairman Abdul Rehman Aziz, and representatives of mobile phone manufacturers recently met with Federal Minister for Commerce Jam Kamal Khan. The meeting aimed to address several issues impacting the local manufacturing of automobiles and mobile phones, highlighting the industry’s challenges and seeking governmental support.
Abdul Rehman Aziz, Chairman of PAAPAM, raised concerns about the current regulatory duty (RD) regime on imported vehicles. He emphasized the need for imposing RD across the board on all old and used vehicles. Currently, 70% of used car imports below 1,300cc are exempt from the newly imposed RD, as stated in the Finance Bill 2024-25. The budget introduced a 15% RD on imported used cars exceeding 1,300cc, primarily at the request of local assemblers. However, this measure did not fully address the industry’s concerns, as the majority of small vehicles, which are imported in large numbers, remain exempt.
Aziz highlighted that the exemption of smaller vehicles from RD negatively impacts local manufacturers. He argued that a uniform RD on all imported vehicles, regardless of engine size, would create a level playing field for local assemblers and support the growth of the domestic automotive industry. By imposing a blanket RD, the government can also curb the influx of used cars, which often undermine the market for new, locally assembled vehicles.
Representatives of mobile phone manufacturers, led by Aamir Allawala, echoed similar concerns. They demanded a ban on the import of old mobile phones to support the local industry. Allawala pointed out that the import of used phones hampers the growth of local manufacturing and leads to revenue losses for the government due to undervaluation and tax evasion.
The mobile phone industry representatives also requested a revision of the General Sales Tax (GST) policy. Currently, an 18% GST based on the value of mobile phones is applied, which, according to them, can lead to mis-declaration of values at the import stage. They proposed implementing a specific rate for GST on mobile phones to prevent undervaluation and ensure fair taxation. This move, they argued, would not only support local manufacturers but also increase government revenue.
Federal Minister Jam Kamal Khan assured the industry representatives that their concerns would be taken seriously. He emphasized the government’s commitment to fostering a conducive environment for local manufacturing. Khan stated that these issues would be addressed in consultation with the Ministry of Industry and Production, the Ministry of Finance, and the Federal Board of Revenue (FBR).
Khan pledged all possible support to encourage the local manufacturing of auto parts and mobile phones. He stressed the importance of local manufacturers focusing on export markets as their primary goal. By boosting exports, the industries can achieve sustainable growth and contribute significantly to the national economy.
The meeting concluded with a mutual understanding of the need for continued dialogue and collaboration between the government and industry stakeholders. The government’s commitment to addressing the industry’s concerns was seen as a positive step towards strengthening local manufacturing.
These discussions highlight the broader challenges faced by Pakistan’s manufacturing sector. The need for regulatory reforms, fair taxation, and support for local industries is crucial for the country’s economic development. By addressing these issues, the government can pave the way for a more robust and competitive manufacturing sector.
