Vendors Want 51% Increase in Quota for Import of CKD Parts

Auto part vendors have urged the State Bank of Pakistan (SBP) to increase their foreign exchange quota by 51% to $13 million a month from the current $8.59 million to avoid supply-chain disruption in the industry and streamline matters in line with the government’s policy.

In a joint letter written to the SBP governor, federal secretary for industries and production and CEO of the Engineering Development Board (EDB), the Pakistan Automotive Manufacturers Association (PAMA) and Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) requested removal of anomalies from the auto sector.

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In July 2022, the government had fixed an import quota of original equipment manufacturers (OEMs) of 4-wheelers at 50% of their average import of the last four months. The stakeholders highlighted that this condition has severely affected the supply chain of the industry. In the letter, the two associations (PAMA and PAAPAM) stressed smooth clearance of import consignments from July 2022 onward.

“Information is not widely available to automotive vendors and their consignments are stuck at port which is hindering the production of vehicles at auto manufacturers end.”

It is pertinent to mention that OEMs specializing in motorcycle, tractor, truck and bus parts are allowed to import merchandise without any restrictions because CKD imports in these segments are quite low and amount to around one-fifth of passenger car and SUV segments. The relaxation is given to them to fulfill the demand of the agricultural and public transport sector. “We therefore request an additional quota of $2 million for this (car and SUV) essential segment of the auto sector,” the letter said.

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Since the industry is bracing for introduction of new car models, OEMs and vendors are required to import machinery, molds, tools and fixtures, they said. In the said letter, the two associations also demanded:

“For smooth development of local parts, the trial runs are conducted months before the start of mass production. We request enhancement of quota for import of machinery and allied equipment. We urge SBP and EDB/MOIP (Ministry of Industries & Production) to intervene and allocate a minimum quota of $13 million per month for bare minimum working of all segments of the automobile sector.”

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The two associations have also requested the government to establish a working-level committee under the chairmanship of the SBP governor and members from all related stakeholders to decide on foreign exchange allocation to the automotive vendors.

Source: Business Recorder

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