The government recently announced to dissolve the Engineering Development Board (EDB) in a cabinet meeting chaired by the Prime Minister himself. EDB was the apex government body that was pivotal in localizing the auto parts industry to a great extent.
Mainly there are two reasons identified as the driving factors behind the closure of EDB. These are;
- The supposed involvement of the Board in rampant corruption and delay in giving approvals for CPEC power projects.
- Multiple complaints from the new market players in the auto manufacturing sector.
According to the reports, EDB was hindering the entry of new auto manufactures which led to the complaints and finally a permanent closure.
EDB and Impact of its Closure
During the first ten months of Financial Year 2018, Pakistan’s import bill reached $45.56 billion. The export bill against this stood at $20.55 billion portraying a picture of the mega-trade deficit. One of the biggest contributing factors to this huge import bill was the import of auto parts. The major auto manufacturing companies in Pakistan have localized the production. However, they still import most parts due to the non-availability, which increases the cost of production and the import bill.
The EDB helped reduce this trade bill by localising the manufacturing of auto parts. Pakistan Association of Automotive Parts and Accessories Manufacturers’ (PAAPAM) Vice Chairman Mohammad Ashraf Sheikh told;
The EDB was the platform that helped grow the vendor industry and now over 300 parts manufacturers are supporting the industry in achieving greater localisation – 75% in cars, 96% in tractors and motorcycles, and 80% in three wheelers.
He added that due to EDB’s localisation of auto parts, the country annually saves $3 billion. The VC further added;
It is unfortunate that the government has failed to safeguard the AIDP (Auto Industry Development Plan) 2016-21 and it is no more being followed. Its custodian has been dislodged and the industry has lost a one-window facility. Our members’ grievances are not being alleviated. It will devastate ongoing growth of localisation in the country.
The apex engineering board was under-staffed for so long with limited resources available. The governments, current and previous ones, didn’t focus on investing in the department or engineering overall.
In fact, the department was without a CEO for three years between 2012-15. Then again, EDB was operated without a CEO since March 2017 before the government finally announced to dissolve it last month. Instead of bringing reforms to EDB, the government decided to permanently close the department that helped bring down the import bill significantly.
The EDB was established back in 1995 with an aim to localize production and create more jobs in the engineering sector.