Auto sector concerned, as government dissolves EDB

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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.

3 COMMENTS

  1. It is surprising to see that auto assemblers are concerned about the dissolution of their regulator. Shouldn’t they instead be happy that their regulator who was supposedly there to check their malpractices is no more?

    This shows a bigger problem. While there may not be any evidence of corruption by any EDB official, the whole industry knows that the auto assemblers have made an informal cartel among themselves and they are known to intensively lobby and bribe the relevant regulators so that they do not enact more effective laws against them. As a result, the general public is at a loss as they are left at the mercy of these oligopolistic auto assemblers who can make any rule that they please, and no one is there to challenge their malpractices.

    Clearly, the regulator was not doing its job and it is a good step to dissolve them as there should be some sense of accountability. However a more effective regulator should be put in place at the earliest.

  2. AoA sir EDB regulates import of CKD and grant of manufacturing certificate. Price or monopoly control is not in its ambit.

  3. True Asim but EDB was responsible for introduction of automotive safety standards, ensuring transfer of technology, making the industry competitive and consumer friendly, focusing on production quality and ensuring modernization of industry (replacement of 1980s era models like Mehran). They have mostly failed in all areas.

    The auto industry defends EDB as the regulator allowed them to produce obsolete , unsafe cars with no proper safety and emissions standards. EDB also permitted same models to be dumped for 30+ years whereas globally models are replaced most every 5-6 years

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