KARACHI - Conspiracy to cut down CBU rates on imported bikes will destroy manufacturing and engineering base of country while endangering huge investments along with thousands of lay off, sources at Pakistan Automobile Manufacturers said while reacting to the proposal being considered at ECC on CBU duty reduction.

The proposal of reduction in duties on import of completely built units (CBU) motorcycles indicates that the policy makers intend to make the country a trading hub instead of manufacturing state, they further added.

It seems that the policy makers have no confidence on the local industry that grew by 37 percent on average during last ten years with the investment of billion of rupees in the country, they claimed.

They said that local industry has already absorbed shocks of power shortage, inflation and increase in cost of doing business. On the other hand, policies in the country are being made behind the closed doors without consulting the actual stakeholders, they added.

“It would be very unfortunate if the policy makers allowed the duty incentive to appease only one blue-eyed motorcycle manufacturer on the name of new investment, who is even not a new entrant”, they added.

“It is a clear indication to the investors that the government prefers trade against manufacturing”, an expert said adding that in a growing industry that is nowhere near maturity, it indicates a no confidence of the policy makers in their own industry.

They said that the proposal to reduce duties on CBU motorcycles to 35 percent from the present 65 percent would be another big scam in the local manufacturing industry.

Arshad Awan CEO General Engineering said as a result most of the time policies hurt rather support the growth of the industry and the economy or success of initiatives.

“We are unable to understand what has warranted this complete U-turn in policy for the motorcycle industry of Pakistan that has been the most successful over the years, recording an average growth rate of 37 percent over the last ten year”, he said.

He said that strange justifications have been presented to the Economic Coordination Committee (ECC) that the motorcycle industry is now strong enough and can absorb the CBU import from China that is expected after this policy decision.

The trade with India in auto sector may also open after a December 31, 2012, review of situation by the Cabinet. This factor has also been discounted on the same assumption. The policy document among other things, recommends bringing down CBU rate of duty to 35 percent from the present 65 percent.

He said China is the largest producer of motorcycles in the world. It has surpassed even Japan in this area. With a production of 27 million units in 2010-11, its motorcycle industry is on most solid footing. Even an industry of this proportion maintains a custom duty of 90 percent on CBU import. Even at this high rate of duty, not everyone is allowed to import motorcycles. The government regulates imports through issuance of import permits.