Inclusion of auto parts in Pak-Thai FTA to hurt industry

LAHORE - Inclusion of auto parts in FTA with Thailand will instantly result in collapse of the prevalent local auto sector. New entrants would shy away, auto parts industry would perish and all the benefits to the country would be lost.

This was stated by Pakistan Association of Automotive Parts and Accessories Manufacturers vice chairman Syed Mansoor Abbas.

The Association has conveyed its serious reservation to the federal government on inclusion of auto sector in Pakistan-Thailand Free Trade Agreement (FTA). “We are not against FTA with Thailand rather we want level-playing field-the same incentives provided to the auto parts makers in Thailand,” he added.

In a letter addressed to Secretary Ministry of Commerce, the PAAPAM has stated that the Auto Parts Manufacturers (APMs) are deeply perturbed by the ongoing negotiations between the governments of Pakistan and Thailand for concluding a free trade agreement between both countries.

“PAAPAM wishes to express its serious concerns on the tremendous damage which would be caused to the auto parts manufacturing industry by the proposed inclusion of automobile sector in the Pak-Thai FTA.” Syed Mansoor Abbas said that this single step would jeopardize the future of over 3 million people earning their livelihood from the automobile sector. It will also give out a negative signal of unstable Government policy to the global and local players in the auto industry.

Paapam vice chairman said that Automotive Development Plan 2016-2021 (ADP) is the document that governs the future policy for the auto sector. Including auto sector in any FTA would discredit the government and scare away massive investments in the pipeline.

He said that as a consequence of the current Auto Policy, an increased activity in assembling sector is evident. Existing assemblers are preparing to launch their new models and vehicles in 2017, 2018 and 2019, while several global manufacturers have already announced their entry in the Pakistan auto sector such as Renault, Hyundai, Kia, FAW and other Chinese automobile manufacturers.

Under the FTA, reducing customs duties to zero percent for localized parts is incomprehensible, as it would shut down the entire APMs industry. Mansoor Abbas observed that for Non-Localized parts, the existing Assemblers/OEMs are already importing these CKD parts from Thailand. Hence, FTA duties would bring no additional advantage to Thailand. The net loser would be the Government of Pakistan as it would deprive the exchequer of huge sums of tax revenues. Additionally, the APMs industry would be the biggest loser, as the potential of future localization of such CKD parts would be eliminated.

He said that PAAPAM is totally against inclusion of the automobile sector in the Pak-Thai FTA negotiation and strongly requests the government to completely exclude this industry from the ongoing negotiations with the Thailand Government.





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