A decision to this effect was taken here on Tuesday in a meeting of the Economic Coordination Committee (ECC) of the Cabinet – the country’s highest economic decision making forum. The summary to reduce the age limit had been quietly forwarded by the Ministry of Industries, which is pleading the case on behalf of automobile industry lobbyists.
“The industries secretary argued that the import of used units is severely damaging the domestic car industry,” stated an official release. The secretary said that the import of cars up to five-years-old was resulting in idle production capacity in domestic industry, and may affect 200,000 jobs.
The ECC’s constituted committee will be headed by Chaudhry Pervaiz Elahi, the pro-lobbyist minister for industries, and will submit its report in the next meeting.
To make its case, the Ministry of Industries has made a selective comparison of prices of imported used cars and locally-assembled cars in its summary. It complained that an imported Suzuki Alto is available at Rs750,000 compared to a locally-assembled Suzuki Mehran, which costs a lower Rs607,000. However it said nothing about the relatively low production quality of the Mehran against the better quality Alto. Similarly, it said that the imported Toyota Fielder is available for Rs1.55 million, against the Corolla GLI which costs Rs1.82 million.
The ministry claimed that due to the relaxation in the age limit for imported cars during the last fiscal year, 56,973 used cars were imported which account for nearly 37% of local production. It added that when the minimum age limit was three years in fiscal 2010, car imports stood at only 5% of local production.
It pleaded that if the decision was not reversed, brands like Suzuki Swift, Suzuki Mehran, Suzuki Cultus, Honda City, Corolla XLI, GLI and Altis will be affected. It added that Indus Motors sold only 5,264 units during the July to August period this year, as against 7,362 units in the same period last year.
Motorcycle tariffs reduced
The ECC also reduced tariffs for the motorcycle industry, which will reduce prices of local bikes. On subassemblies, it has reduced the tariff from 20% to 15%; from 65% to 57.5% on completely built units and components for assembly; from 20% to 10% on imported completely knocked down (CKD) kits; and reduced the tariff on local CKD kits to 38.75% from 47.5%.
The ECC has also approved the allocation of 202 million cubic feet of gas per day to four fertiliser plants, and the construction of a 1,000-kilometre long pipeline in order to utilise additional gas from the fields. In this regard, it has set up a committee to work on the determination of legal modalities, the mechanism for pricing, review of agreement and the estimation of cost and time. The said committee will present its report in the next meeting.
PIA gets Rs16b bailout package
The ECC also approved a Rs16.2 billion bailout package for Pakistan International Airlines (PIA). It extended the repayment of Rs6.8 billion in loans for two more years, while issuing fresh sovereign guarantees for Rs9.36 billion in short-term borrowings. The loan will be obtained at about 12% markup.
The Defense Ministry had sought the bailout on grounds that the cash flows from operations were insufficient to pay the company’s debt and the PIA had to raise fresh loans to repay the same.
Published in The Express Tribune, October 24th, 2012.
COMMENTS (10)
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if we open our markets to europeon and japanese used cars,we will give our people quality products.our industry cannot compete till it get involved in competition.they are selling garbage in high price..if u buy a toyota japan assembled 1988 model,it still runs fast and it more comfortable.same is honda.but new cars are just like gujrat made fans which are substandard things.a middle class man can't get car.a car which costs in tribal area as 1 lakh is in Pakistan tax paid territory as 10laks.toyota fielder is used as taxi in swat region
it is simply a case of obliging local manufacturers at the cost of general public. decision makers palms r definitely greased by local manufacturers otherwise they cant make such public enemy policies. ppp has lost millions of voters after this decision and the elections r in the pipeline.
@gp65: protection from overseas competition is acceptable for some initial period but in due course you have to develop the expertise to be competitive. protectionism should not lead to complacency.
I will buy imported vehicle due to better quality as soon as spares are aval
I will not go into the negative aspects of this action by our Government Policies but it is well known by all consumers the quality of Pakistani cars is sub-standard and the price is also overcharged by our beloved local car manufacturers. In an article published on 10 Aug by the Express Tribune only " Global automobile giant Toyota’s affiliate in Pakistan announced that the 2012 financial year was its most profitable ever in the country, earning Rs4.3 billion in net income, a 57% increase over the previous year" and again "Sales figures for new cars have been improving, reaching a four-year high of over 157,000 units in 2012, an almost 23% increase over the previous year". Having said that the citizens of Pakistan are used to get a bad deal for the money so i will not be surprised if the car manufacturers lobbyists will get their way and we will have further increase in car prices so that no one can afford a new or an old car except a very few elite people.
Protecting profits of Japanese car companies at the expense of Pakistani consumers? Interesting.
Locally made cars especially Toyota have to add features which are standards in other countries. They are fleeing the local consumers besides government MUST reduce duties so local assembled cars are more reasonably priced. There should 100% deletion plans for automobiles manufactured in Pakistan like in India.
Appreciate the report/review from Mr. Shahbaz Rana on automobile industry. The case is **protection of domestic industry, which is unfit for human consumption. Pakistan under PAMA only provided protection to the domestic industry for Japanese for decades, with protective walls for tariff. Now the under the new WTO regime is not applicable. Pakistan being membcollsiaer of WTO has to follow the rules. Hence tariffs are rationalised and duties were reduced. We have example of Malaysia's Proton, which is one of the best automobile in the region, and exported worldwide without any licensing/collaboras tion from MMC (Mitsubishi Motors Corporation, Japan). But Malaysia honored WTO and opened its markets for imports for trershe lowest duty, which opened floods of switch over from the only Proton to all imported Japanese cars. It is very important for PAMA and the automobile industry of Pakistan to conform to JAMA (Japan Automobile Manufacturers Association) with adherence to quality conformance, by McGrawHill JD Powers quality criteria in Pakistan to qualify for exports of cars in the regional markets of SAARC, China where Pakistan will have tariff advantage. The consumer of Pakistan auto buyer is sensitive and knowledgeable that he will never protect the absurd quality of car, which has never been sold outside Pakistan because it is junk. I have talked to JAMA to open its office in Pakistan to ensure adherence of quality control to international standards, and increase the equity stake of Japanese investments for local production. The import of refurbished/used car is a lesson for PAMA and its members to learn, to stop producing auto in Pakisdtan on Euro Zero cars, trucks in Pakistan and penalise the consumers.
Why Toyota And Honda Company Not Manufacturing 1000CC Car In Pakistan? Mainly 1000CC Cars And Under 1000CC Cars Used Cars Being Imported. The Deletion Program Should Be Checked Strictly To Promote And To Manufacture Parts Locally. Auto Manufacturer Must Expand To Include Trucks And Public Bus. Citizen Would Appreciate To Manufacture 1000cc Cars, Mini Vans, Trucks In Pakistan.