INTERVIEW WITH ANWAR IQBAL, CEO SILVER SEAL INTERNATIONAL
Nov 28 - Dec 4, 2011
I have been associated for last 18 years with the automobile industry of Pakistan. Mostly, my exposure is in two wheeler/three wheeler industry. I worked for some world famous auto brands like Fiat, Piaggio (Vespa), Hyundai, and Faw. Presently, I am running my own company i.e. Silver Seal International. Nowadays, my company is establishing a complete motorcycle manufacturing/assembly plant in Bangladesh, which is the first motorcycle manufacturing plant in Bangladesh. I created a new horizon in two wheeler industry/market of Pakistan. I introduced new products, brands and created new market segments by innovative ideas. I achieved success in Pakistan and in international market as well.
PAGE: TELL US SOMETHING ABOUT YOURSELF.
I started my career in 1982 and served in the beginning of career in various multinational companies like Esso Eastern Inc., Union Texas Inc., Bristol Mayer Squib and Singer.
My first assignment was with American Oil giant Esso Eastern Inc. I am masters in economics and earned my business management degree in industrial management.
PAGE: IS AFGHAN TRANSIT TRADE (ATT) SEVERELY AFFECTING LOCAL MANUFACTURERS OF SPARE PARTS BESIDES CAUSING LOSSES OF BILLIONS OF RUPEES TO THE GOVERNMENT?
ANWAR IQBAL: Smuggling between Pakistan and Afghanistan is at its peak, as transfer and sale of spare auto parts and Nato forces equipment go on rampantly unchecked, causing an enormous customs tax and duty revenue losses worth billions every year.
Auto-spare parts and engines are transferred via Afghanistan border, and sold openly and massively at Quetta's Zarghon Road, while quite often, even a full-fledged vehicle is prepared from these spares and sold. All this is going in broad daylight despite the presence of some of the heaviest guarded check posts ever, at most sensitive points. Most parts of Balochistan including Quetta are replete with massive unregistered 'indigenously manufactured' vehicles, plying on roads, against which there has been no action. All this costs the government billions in tax revenue loss.
PAGE: IT IS SAID THE SMUGGLED ITEMS ARE SOLD AT 50-60 PER CENT DISCOUNTS AS COMPARED TO THE PARTS PRODUCED LOCALLY OR IMPORTED. WHAT DO YOU SAY?
ANWAR IQBAL: Everyday hundreds of consignments of spare parts arrive in the country from Afghanistan, which are sent to major cities of the country. True, the smugglers are selling these parts at 50-60 percent less rates than the parts made locally or imported through proper channels. Many dealers have started doing business with them to mint more profit. The government has to maintain strict check on smuggling as it would not only help the government to increase the revenue, but also enable legal businesses to expand and generate more revenues and employment opportunities.
PAGE: PAKISTAN ASSOCIATION OF AUTOMOTIVE PARTS AND ACCESSORIES MANUFACTURERS (PAAPAM) MEMBERS HAVE ACHIEVED 90 PER CENT LOCALIZATION FOR MOTORCYCLES. YOUR COMMENTS.
ANWAR IQBAL: No, I do not agree with the claim of Paapam. The actual deletion is around 60 percent. Motorbikes manufacturers are importing spare parts under commercial imports through outsourcing, which is a real challenge to the local vendors. This is one method. Second method is vendors arranging the import of the parts and then supplying to the OEM, in their own name. I can even give you list of the parts which are imported and claimed to be locally manufactured. You cannot find the adequate facilities of manufacturing of these parts in all over Pakistan.
PAGE: WHAT ARE YOUR VIEWS ON PAKISTAN IS ONE OF THE MOST COMPETITIVE GLOBAL MANUFACTURERS OF 2-WHEELERS AND HAS NOW ENTERED THE EXPORT MARKETS?
ANWAR IQBAL: No, we are not most competitive. China is most competitive. But, we can explore neighboring countries and regions, especially African continent, where we have freight cost edge over China.
PAGE: WE HAVE OVER RS60 BILLION SPARE PARTS MARKET AND DOMESTIC INDUSTRY HAS ONLY 20 PER CENT SHARE IN IT. WHAT ARE YOUR VIEWS?
ANWAR IQBAL: Smuggling and under invoicing of auto parts and accessories are severely affecting the businesses of local manufacturers of spare parts besides causing billions of rupees losses to the government. According to federal board of revenue's estimate, over Rs170 billion worth of goods are smuggled under the garb of Afghan transit trade, causing a loss of Rs21.5 billion to the national kitty. Millions of rupees under invoiced parts are coming into the country from China. Almost all types of parts are coming from Thailand and Dubai in astonishing quantities and it is hard for local vendors of such parts to survive.
Pakistani markets are flooded with smuggled goods of all descriptions. The smuggling of auto spare parts like almost every other commodity is done through ATT under the nose of the authorities responsible to stop it.
Over 200 trucks loaded with smuggled goods come daily. On the other hand, input cost for domestic industry is very high in comparison to global industry standard. Domestic industry also needs balancing and modernization and needs further investments but presently investment atmosphere in the country is not very positive.
PAGE: WHAT ARE YOUR COMMENTS ON 16 PER CENT GENERAL SALES TAX AND OTHER TAXES?
ANWAR IQBAL: As I said earlier that input cost for domestic industry is very high. One of the major cost components is 16 percent general sales tax and other taxes. Automobile industry is mother of all industries so we have to think about it. We have to give some special consideration for making it competitive as per global standard. If India can get most favored nation (MFN) status, then auto industry should also be awarded most favored industry status. Pakistan's thriving market can be taken over by China and India in not doing so.