INTERVIEW WITH FAISAL KHALIL, FORMER PRESIDENT MOTORCYCLE SPARE PARTS IMPORTERS AND DEALERS ASSOCIATION

KHALIL AHMED
(feedback@pgeconomist.com)

Nov 28 - Dec 4, 20
11

PAGE: TELL US SOMETHING ABOUT YOURSELF.

FAISAL KHALIL: My father Sheikh Khalil Ahmed started motorcycle spare parts business in 1976 .I am the second generation doing this business for last 20 years. I have served as president of motorcycle spare parts importers and dealers association (MSPIDA) from 2006 to 2008. I have also served as member managing committee of Karachi chamber of commerce and industry (KCCI) and at present, I am a member of the executive committee of federation of Pakistan chambers of commerce and industry (FPCCI).

PAGE: Is it true that auto parts and accessories smuggled under the Afghan transit trade (ATT) are severely affecting the business of local manufacturers of spare parts besides causing losses of billions of rupees to the government?

Faisal Khalil: First of all, please note that smuggled goods are not only coming through ATT. In fact, mostly goods are imported to Islam Qila (Afghanistan) and then from there they come through Chaman and Quetta directly to Karachi through buses. There is nobody to check this trade. The people involved in this trade are powerful so nobody is going to check these goods. These people only do the business of high custom duty and the items, which have very high custom value. As you know, the duty of motorcycle spare parts is very high and value of some of the assets is higher than tractor and car parts so this is a big attraction for the smugglers. Yes, you are right this is causing loss of billion of rupees to the government.

PAGE: IT IS SAID THE SMUGGLED ITEMS ARE SOLD AT 50-60 PER CENT DISCOUNTS COMPARED TO THE PARTS PRODUCED LOCALLY OR IMPORTED OFFICIALLY.

FAISAL KHALIL: It is correct as these goods are without any custom duty and even the quality is very low so it is almost half price of the imported products.

PAGE: PAKISTAN ASSOCIATION OF AUTOMOTIVE PARTS AND ACCESSORIES MANUFACTURERS (PAAPAM) MEMBERS HAVE ACHIEVED 70 PER CENT LOCALIZATION FOR PASSENGER AND LIGHT COMMERCIAL VEHICLES AS WELL AS 90 PER CENT FOR MOTORBIKES. YOUR COMMENTS.

FAISAL KHALIL: If you will check the local industry, most of the industries are only doing assembling not manufacturing which is again a setback and all this is done under the umbrella of engineering development board (EDB). The SRO is approved by EDB. They import products in bits and pieces from China. Under this SRO, 80 per cent of the items are imported and 20 per cent parts are bought locally. They pay five to 10 per cent custom duty on imports.

PAGE: PAKISTAN IS ONE OF THE MOST COMPETITIVE GLOBAL MANUFACTURERS OF TRACTORS AND 2-WHEELERS AND HAS NOW GEARED UP INTO THE EXPORT MARKETS. WHAT ARE YOUR VIEWS?

FAISAL KHALIL: Yes, you are right. I will talk about the motorcycle. Custom duties on high tech parts specially engine parts should be brought down. They are far better in quality. Reduction will improve quality of motorcycles at low costs.

PAGE : WE HAVE OVER RS60 BILLION SPARE PARTS MARKET AND DOMESTIC INDUSTRY HAS ONLY 20 PER CENT SHARE IN IT. WHAT IS YOUR TAKE ON THAT?

FAISAL KHALIL: To increase the domestic share, we need original manufacturers not assemblers. We can only increase share for our local products by entering into joint venture with China. They should invest in Pakistan. But, unfortunately there is no infrastructure and electricity taxes and law and order situation are not suitable for foreign and local investors.

PAGE: WHAT ARE YOUR COMMENTS ON 16 PER CENT GENERAL SALES TAX AND OTHER TAXES?

FAISAL KHALIL: This is also a big setback. I would say the sale tax should be five per cent and it should be without any adjustment. 16 per cent GST is misused by the local industry and causes big loss to the government.