INDUSTRY NEWS OCTOBER 2007
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1	Economists Ask Government To Increase Deletion Of Auto Parts	Economists have urged the government to increase deletion of auto parts as auto assemblers having achieved localization of 60-70% components still pay higher amount on the balance 30-40% imported components. Pakistan is now manufacturing almost all body & mechanical parts, plastic components, tyres, batteries, seats, and some engine parts of cars. Some critical parts of the units are still imported by assemblers. The deletion level in cars ranges from 50-70%. The assemblers that have achieved higher deletion levels are correspondingly cheaper than those that have lower deletion level. However, the cost of local components is much less than that of imported components of even those models where 70% deletion has been achieved. The is partly due to the fact that the high-tech parts not produced in Pakistan are costlier as well and partly due to higher cost of even low-tech parts that are produced outside Pakistan. The government for over a decade made it mandatory for the car manufacturers to localize car components progressively for manufacturing vehicles in the country. The compulsion was imposed under the WTO's trade-related investment measures (TRIMs). After the expiry of TRIMs, last year the government was forced to allow the import of those components that are manufactured locally in the country. The components that are not manufactured locally are allowed under completely knocked down mode at 35% import duty and those that are produced in Pakistan are importable at 50% duty. Most of the local manufacturers of car, however, preferred to import only the parts that are not produced in Pakistan . One car assembler opted to import those parts that were locally produced by paying 50% duty. The result of the decision was that the cost of its models produced on hundred percent imported components increased by Rs. 200,000 (US $ 3,279) to Rs. 300,000 (US $ 4,918) per unit over the comparable models of other assemblers. The sales of these high cost models took a nosedive. This example has convinced other local assemblers that use locally-produced components, is in their interest. The quality of these parts is checked and confirmed by the parent companies sitting mostly in Japan and South Korea. The government on its part is also interested in localization of imported parts. It has announced a policy under which every year some components importable at 35% duty would be transferred to 50% duty bracket. This would encourage the assemblers to go for the local production of high duty parts. Only then would the burden of import of these components be reduced. The government desires to achieve this aim by the time the country attains 500,000 annual car production level in 2011-12, though the private sector does not expect the car production to exceed 350,000 units in five years time. They say the achievement of growth target in the automobile sector in the next five years will largely depend on higher deletion of auto-parts and affordable financing facilities similar to or higher than those that existed in 2005. (Source: Engineering Development Board Industrial Bulletin; September 2007)
2	Indus Motor Achieves 50,000 Unit Sales	The Indus Motor Company (IMC) has achieved 50,000 unit sales for the year 2006-07. A statement on July 4 said that to mark the achievement, a ceremony was organized. The event was attended by senior management of IMC, its 35 dealerships and IMC employees. Addressing the gathering on the occasion, IMC Chief Executive Officer, Pervez Ghias, congratulated all on the achieving this historic milestone which, he added, would not have been possible without the support of the stakeholders, particularly the joint venture partners TMC and TTC, IMC dealers, vendors, suppliers, employees and the customers. The occasion was commemorated by the chairman, CEO and dealer principals jointly pressing the button to print the 50,000 th invoice in full view of the participants. The statement said that this milestone is proof of IMC's commitment to meeting ever-increasing demand for automobiles in Pakistan . IMC also received the "Vehicle Sales Record Award" by Toyota Tsusho Corporation earlier this year. At the time, Junzo Shimizu, President TTC said, 'Indus Motor Company will continue to expand capacity by enhancing investment in current production facilities as well as consider setting up an additional plant. The automobile industry has a key role to play in increasing employment and transfer in technology while being a major contributor of the engineering sector. (Source: Engineering Development Board Industrial Bulletin; September 2007)
3	100 CNG Pumps Needed To Run 2,000 Buses	ISLAMABAD: The federal government estimates that the City District Government Karachi will have to establish over 100 CNG stations, after identification of spots, to operate 2,000 CNG buses under a special subsidy programme. Hydro Carbon Institute and various companies, including PSO, Shell and others, have shown willingness to establish their CNG stations at certain locations. According to the federal government's estimates, 14,000 buses, coaches and wagons ply the roads of Karachi and the government wants to add another 2,000 in the next few years. The government has allocated Rs500 million for providing subsidy to the private sector to buy CNG buses in the current fiscal. The federal government plans to spend Rs5 billion on this scheme over the next five years. In the first year, the government allocated Rs500 million under PSDP, enabling the authorities to kick-start work on it. Answering a query regarding interest subsidy for CNG buses, an official said the government had constituted a steering committee headed by Additional Secretary of the Planning Commission Asif Bajwa, which had been assigned to work out operational details of the project. The steering committee, sources said, was to convene another meeting by the end of the current month to finalize its modalities. At the first stage, the government planned to buy 500 CNG buses for Karachi, the official said. It is yet to be finalised that how much interest ratio will be borne by the federal government, as there is a proposal that the federal government should contribute 70%. After Karachi, the federal government would launch the scheme in Lahore at the second stage, said the official and added that the scheme would be launched in other cities at the latter stage. Public transport is highly unsatisfactory in big cities of the country. (Source: The News Newspaper; August 16, 2007)