CPEC: Duty-Free Imports of vehicles from China eating into local assemblers’ share!

[Shaji Pappan]

SANA MAHMOOD
KARACHI: Jean-François Di Meglio, Chief of the Paris-based think tank Asia Centre, while talking to NewsPakistan.TV recently held that CPEC was designed to serve China and Pakistan would only reap ten percent of the benefits.
The present predicament of local truck makers provides gist to Di Meglio’s insinuation.
According to affected Pakistani entrepreneurs involved in fabricating and assembling of heavy machinery here, all the CPEC-related heavy vehicle items, machinery, raw material and labor is coming from China.
Truck and bus manufacturers pointing towards 95 percent recent augmentation in the imports of heavy vehicles (i.e.: From $88 million in July-Dec 2015 to $175 million during Jan to June, 2016) maintained that manifested demand for heavy vehicles is increasing.
In this scenario, local assemblers claim that duty-free import of vehicles from China (and other countries) is encroaching upon their business.
If the Government somehow manages to convince Chinese investors to let local manufacturers sell their heavy vehicles to the CPEC project, the industry will ascend fast allowing them increase the installed annual capacity of thirty thousands.

http://www.newspakistan.tv/cpec-duty-free-imports-vehicles-china-eating-local-assemblers-share/

 

[Mo12]

This is not an issue for Pakistani from this forum.

Most are contempt with the investment China is doing in Pakistan, so its a win win situation for both nations.

 

[Rajaraja Chola]

Blasphemy.................

 

[Indus Pakistan]

@Shaji Pappan Good. Now what they need to do is import all, yes all heavy vehicles from China. Shut down all those money making franchises - sham rackets pretending to be industry. Shut them and be done with them.

encroaching upon their business.

What business? Does Pakistan even have 'heavy vehicle industry'?

 

[Shaji Pappan]

@Shaji Pappan Good. Now what they need to do is import all, yes all heavy vehicles from China. Shut down all those money making franchises - sham rackets pretending to be industry. Shut them and be done with them.

What business? Does Pakistan even have 'heavy vehicle industry'?

Hinopak Motors, Ghandara Nissan, Ghandara Industries and Master Motors..
http://www.automark.pk/trucking-sector-pakistan-auto-industry-rides-high/
Chinese exploiting "all imports related to CPEC are tax free" provision here..
But I think authorities take notice of this.. Two days old news..

“The CPEC-related imports will be cleared through computerised system,” the official said.
https://www.thenews.com.pk/print/182393-FBR-to-prevent-misuse-of-tax-concessions-for-CPEC-imports
When we consider CPEC, only cement manufacturers in Pakistan are benefiting now as every other things related to CPEC are importing from China..

 

[wiseone2]

@Shaji Pappan Good. Now what they need to do is import all, yes all heavy vehicles from China. Shut down all those money making franchises - sham rackets pretending to be industry. Shut them and be done with them.

What business? Does Pakistan even have 'heavy vehicle industry'?

there are two ways to look at it. You outlined the first way.

the second way is that one of these money making franchises finds a way to grow into something real

CAPITALISM 101: the objective of a firm is to make money.

 

[Sugarcane]

Auto Industry is probably one of few to get support from common Pakistani, this mafia is looting Pakistanis by selling tin boxes at prime prices.

 

[Indus Pakistan]

Chinese exploiting "all imports related to CPEC are tax free" provision here

Let them. There is hardly any industry in Pakistan anway. We have franchise import mafia. I hope it all dies out and then at some point we see genuine industry emerge in Pakistan. Which heavy industry is there is Pakistan besides corruption and heavy bellies? Have a look at Pakistan steel industry. There is'nt any. Save one old loss making mill and few other private metal recylcling mills there is'nt amy. For a start we don't any irone ore unlike India which has vast reserves in West Bengal. Jharkand etc

The heavy industry we have a a franchise like most industry in Pakistan. This is how it works. Say your friend of Nawaz Sharif's son. You go to him and set up 'NissanPak truck Co' on a 50/50 basis. You have no money. You go to banks and borrow $1,000,000. Get NS's sons contacts to get the loan sorted. You then go about setting up your plant. You contact Nissan Heavy Industries. Then you spend as follows -

$200,000 - Land/building
$300,000 - Tools from Nissan

The left over $250,000 you pocket it.The other $250,000 you give to NS's son. Now you go again to NS's son and ask him if he can get a import licence for Nissan Heavy Vehicles in kit form. Once you got the licence as soon the parts arrive at your so called 'NissanPak truck Co' plant you hire some workers who just drill, screw, weld all the readymade parts together. Then you stamp your name in front of the truck 'NissanPak' trucks. Your only cotribution is srewing all the parts together and the biggest attaching your badge on the front. Here you go the NissanPak truck rolls out.

The best thing is to stop your own money getting stuck as cash flow what you do is have people order the truck and pay large deposit upfront. Use that money to now order the truc from Nissan in broken down kit form. When it arrives screw it together and here you are sir. Take rest of the money. Prodution rate? 3 trucks a week. Just slap a heavy premium of say 50% on top of what Nissan charge you and your making good money for doing nothing or taking no risk.

Now government changes. In comes Zardari. Another guy goes to Bilawel Bhutto. The same thing happens all over again. Only this 'industrialist' can't go to Nissan. So he goes to Mitsubishi and sets up 'MitPak Truck Co'. He goes again to the banks borrows the money through Zaradari's connections. He then builds the 'plant' hire a few dudes and orders the ready made parts for a Mitsubishi truck in kit form. Bla, ba, bla, bla next thing you know MitPak trucks are being sold in Pakistan. You have another 'industry' now.

This cycle continues until you have this truck industry in Pakistan.

NisssanPak Trucks - 3 trucks a week
MitPak trucks - 7 trucks a week
HondaPak trucks - 1 truck a week
PakSuzuki trucks - 3 trucks a week
JapPak trucks - 5 trucks a week.

Now I have simplified, exaggerted to make a point but honestly most of the industry in Pakistan is like this. All they are is foreign (mostly Japanese) franchise rackets being run to make money in a monopoly. The franchises of course are handed out to political favourites or those who give money. That is why Pakistan still does not have ONE, yes even one indigenous car, bus, truck, motorbike in the entire darned country.

And you want to protect these leeches?



*In UK one plant would be expected tp produce over 100,000 units a year. Anything less and it will struggle to be efficient. Most are operating at over 200,000 units a year. That is what you call industry.

 

[Mo12]

Pakistan should buy trucks from India, Indian trucks are cheaper and better suited.

 

[G0dfather]

Bade bade projects mein aisi chhoti chhoti baatein hoti rehti hai.

 

[Indus Pakistan]

Pakistan should buy trucks from India, Indian trucks are cheaper and better suited.

Yes, actually India has genuine truck, bus and car industry. You have indigenous plants, producing indigenous vehicles using indigenous steel.

But sorry. Better to buy 'Chinese' Strategic imperatives. Business is business. Agreed. But loook at the biggest business of them all USA. Do you think they will even buy a Kentucky Fried Chicken fried in Iran? No way. That is geopolitical imperatives.

So for Pak, it is China !

 

[maximuswarrior]

It is always hilarious to see Indians trying to convince how evil and bad Chinese investment is for Pakistan.

 

[Mo12]

It is always hilarious to see Indians trying to convince how evil and bad Chinese investment is for Pakistan.

It is just as hilarious seeing you dismiss it all without thinking about it properly

 

[livingdead]

chinese maal is filling the void but pak govt should use their office to export more pakistani goods to china..(which ever commodity pakistan is good at)

 

[Indus Pakistan]

which ever commodity pakistan is good at

Islam