Auto sector concerned, as government dissolves EDB

ISLAMABAD: As the government has finally decided to dissolve the Engineering Development Board (EDB), not only the existing assemblers but also the new entrants in the auto sector have voiced their concerns regarding the decision without prior arrangements of a substitute.

The EDB was the sole regulator of the auto industry and the sudden decision has raised serious concerns for the auto manufacturers. Currently, there are eight new companies, five in pipeline and two awaiting approval to enter the Pakistani auto industry. Moreover, the companies have raised their voice regarding their future as the government has made no alternate arrangements.

According to sources at EDB, the decision has shocked the five new entrants already working in the auto sector, while Volkswagen and Renault are still in approval stages. “Besides, the move will affect the international commitments, Japanese tie-ups giving a strong impression of being consistent with policies,” said an official at the EDB.

In reply to a query, he said, “There is no corruption case registered against any official of EDB neither any inquiry is pending against the board.” “As of today there is no benefit of dissolving the board. Only a panic has been created in the auto sector,” said the official.

Interestingly, the government has made no alternate plan to keep regulating/supervising the industry. “If functions are to remain the same what is the logic behind dissolving the existing body?” he said.

According to sources within the auto parts manufacturing industry, the lack of understanding by the top level of the government on the role of EDB in running the affairs of the automotive sector was behind the dissolution of EDB. “If the EDB is being dissolved on the ground that it is a corrupt institution than which institution will replace it? Federal Board of Revenue is more corrupt than EDB,” the sources said.  

EDB has been playing the role of a bridge between industry, Ministry of Commerce, Ministry of Industries and Production and Ministry of Finance. It regulated the issuance of input-output ratio certificate for smooth running of the automotive/engineering industry and formulation of policies in consultation with major stakeholders.

As per the official documents, EDB is an apex government body under the ministry of Industries entrusted to strengthen engineering base in Pakistan. The body focuses primarily on the development of engineering goods and services sector on modern lines, enabling them to become technologically sound and globally integrated.

Reacting to the federal cabinet’s decision of disbanding the board, Pakistan Automotive Manufacturers Association (PAMA) has recently written a letter to Prime Minister of Pakistan Shahid Khaqan Abbasi and has appealed the government to immediately review the dissolution of the EDB or announce a successor mechanism/organisation to take over the existing day to day affairs seamlessly.

“It has been the EDB, an arm of the Ministry of Industries, that provided support to the auto industry’s operations and also controlled and regulated the growth of auto industry since the early nineties,” said the letter.