KARACHI, Feb 4: The National Tariff Commission (NTC) has come under fire as bike makers and vendors blamed the commission for violating its mandate to justify undue favour to one Japanese bike maker over 60 assemblers.

At a public hearing arranged by the NTC on February 1, 2012 with reference to a study aimed at providing protection to the local industry, including any incentive to new entrants and to consider request of Yamaha, officials of NTC admitted during the meeting that the audit of local motorcycle industry is being done on the request of Board of Investment (BoI) to facilitate Yamaha.

The NTC had asked the participants to provide details of cost of production along with their audited accounts and tariff related problems.

However it is interesting to note that both BoI and Yamaha chose to stay away from the February 1 hearing as the Chairman BoI had proceeded abroad while representatives from Yamaha also didn’t turn up.

Sources privy to the meeting said Director General NTC Suhail Ahmed admitted that a new study of tariff evaluation is being conducted by the commission on the request of BoI to entertain and accommodate M/s Yamaha as a new entrant in the local bike industry.

But bike assemblers said that this was a blatant violation of the basic mandate of NTC being the facilitator of local industry that to initiate an audit of local industry on the push of a foreign player.

A local vendor asked the NTC members as to how can the commission even initiate to facilitate M/s Yamaha which is not even a “new entrant”, he said.

He added that the NTC Act clearly states in section 4 that: “The function of the commission shall be to advise the government on tariff measures or other form of assistance for, providing protection to the indigenous industry, improving its competitiveness or promoting exports from Pakistan.”

Whereas the current move is to support M/s Yamaha, which will not use the local engineering industry for parts and will assemble the categories which local industry is already producing and looking for exports market.

Razi-ur-Rahman, General Manager Corporate Affairs of Atlas Honda Limited, in the meeting, asked the NTC that it should instead make efforts to implement the agreed five-year tariff plan under Auto Industry Development Programme (AIDP) that was submitted to the government by the Pakistan Automotive Manufacturers Association (PAMA) and Pakistan Auto
Parts and Accessories Manufacturers Association PAPAAM before last budget.

He added it was an agreed plan between the associations of local auto manufacturers and their vendors which covered stakes of almost all the players including keeping consumers’ interest supreme, but this five year tariff plan has not been implemented yet and the NTC has started another tariff study on pressure that is sad indeed.

Convenor Two-wheeler Committee and member Managing Committee PAAPAM Arshad Ameen Awan said the maker of Yamaha bike in its application to the government had claimed to provide 150cc bike at Rs77,000 or Rs20,000 less than the same models being produced by two Japanese bike makers at Rs93,500 and Rs115,000.

He said Yamaha was deceiving the government by claiming itself ‘new entrant’ status besides seeking cut in import duty on completely knocked down (CKD) kits to five from 15 per cent.

However, the maker of Yamaha after remaining in Pakistan market for over three decades had packed up its operation but Dawood Yamaha Limited (DYL) is still producing Yamaha bikes of different categories.By seeking cut in CKD kits, the company also claims to bear Rs8,000 loss per bike for at least eight years which is surprising, he added.

He said in case the government provides any incentive to Yamaha under new entrant policy than the existing Chinese bike makers will close down their units and re-enter Pakistan with a new name to get the tariff protection.

He urged the government to avoid creating a technical flaw whose repercussions would be devastative for the huge investment of local industry and their vendors.

He added that there is no need to facilitate a re-entrant rather than a new entrant as localisation of parts in existing bike has crossed over 90 per cent.

He added that the NTC had asked the stakeholders to give their proposals regarding any concern in writing within 10 days.

PAMA has already informed the BoI that Yamaha is not a new entrant because they have closed their operations in Pakistan in the year 2008 after spending 35 years here.

BoI had recently made a presentation in the Cabinet Committee on Investment (CCOI) meeting and stated that BoI being a facilitator of investment in the country strongly feels that new investment in motorcycle industry needs to be encouraged through reducing the present prevailing duty to 15 per cent on CKD parts to five per cent as an incentive for new investment in Pakistan for five years from the start of production.