New auto players oppose tax relief for Pak Suzuki Motor

Published: December 7, 2018
New players have also demanded that the government impose ban on the import of used cars. PHOTO: FILE

New players have also demanded that the government impose ban on the import of used cars. PHOTO: FILE

ISLAMABAD: New entrants into the auto sector have protested against the government’s willingness to allow Pak Suzuki Motor Company tax exemptions under the auto policy 2016-21.

After introduction of the new policy, French automobile manufacturer Renault and South Korean players Kia Motors and Hyundai announced their interest in starting vehicle assembly in Pakistan. Last month, Volkswagen also inked an agreement with a luxury car dealer for the assembly of vehicles in Pakistan.

These new players plan to invest over $3 billion in Pakistan for the production of cars and trucks.

Pak Suzuki Motor tried to get tax exemptions under the Greenfield investment category from the previous government, but it refused to treat the company, which was planning fresh investment, as a new entrant. However, the present Pakistan Tehreek-e-Insaf (PTI) administration seems to be caving in to the pressure from the Japanese government and has shown willingness to give the incentive to the automaker.

According to officials familiar with the development, Adviser to Prime Minister on Commerce, Industries and Investment Abdul Razaq Dawood has played a major role in convincing Prime Minister Imran Khan that Pak Suzuki Motor should be treated under the Greenfield category in order to secure an investment of $450 million.

Officials said the commerce adviser was of the view that the country could encourage Pak Suzuki to make the investment but at the same time new entrants would be disturbed by the treatment of Pak Suzuki like a new entrant.

Currently, three Japanese companies – Pak Suzuki, Indus Motor and Honda Atlas – have a monopoly in the auto market. However, they are using obsolete technology and their vehicles are of poor quality.

Officials revealed that representatives of the new entrants held a meeting this week at the Ministry of Industries and Production and raised the issue of allowing Pak Suzuki to invest under the Greenfield category.

They raised serious concern and protested against giving incentives to Pak Suzuki. They feared that it would spoil their investment plans and demanded that the company should not be given the status of new entrant. They also asked the government to impose ban on the import of used cars.

The previous Pakistan Muslim League-Nawaz (PML-N) government had approved the new auto policy to break the monopoly of the existing three auto players. Now, the PTI government wants to amend the policy to make way for Pak Suzuki which wants to invest $450 million in Pakistan.

During tenure of the previous government, the Japanese government had also put pressure, asking Pakistan to treat Pak Suzuki’s investment under the Greenfield category.

At that time, the Board of Investment (BOI) had refused to accept the demand of existing auto manufacturers, mainly Pak Suzuki, for tax exemptions. It declared categorically that it would not amend the new auto policy in any way that was designed to bring new players, improve vehicle quality and ensure swift delivery.

The PML-N government believed that any change in the auto policy would bring a bad name to the country globally and new investors would walk way. Officials pointed out that Pakistan had also been facing criticism in the past that it had inconsistent policies and therefore new investors were not ready to come to Pakistan.

Published in The Express Tribune, December 7th, 2018.

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Reader Comments (7)

  • MM Khan
    Dec 7, 2018 - 9:37AM

    If they take this decision then this would be an economic murder of Pakistan auto industry. And clearly PTI is freakin lost its sense. How can you treat Pak Suzuki as greenfield, infact they should be given hefty fines for looting Pakistan public. Ridiculous if his happens, in reality Pak Suzuki should be made bankrupt. Atleast Nawaz Govt had the guts to say NO.Recommend

  • Muhammad Omer Asghar
    Dec 7, 2018 - 10:44AM

    Gov should not come under any pressure of Pak Suzuki. They are producing vehicles like Ravi Bolan Swift Mehran that are produced no where in the world.Suzuki era should come to an end Recommend

  • Khappay !
    Dec 7, 2018 - 12:08PM

    Suzuki fear imported cars because they are of excellent quality thus want a complete ban. They simply don’t want to come in the competition to make quality products and compete with imported cars. What a shame Suzuki. You know very well customer preference thus you want a ban on imported cars. Grow up. Competition Khappay !Recommend

  • Rao Hassan
    Dec 7, 2018 - 3:43PM

    Pak Suzuki – earned millions of dollar from Pakistanis by providing low quality automobiles. now when new entrants like VW, Renault, Kia are entering in Pakistan market with innovative and better quality products, Suzuki is seeking government support for survival. why Suzuki did not initiate this investment several years ago? why now? did any one bother to ask about the poor quality of “suzuki mehran” – known as tin box. in my personal opinion no relieve should be given to suzuki at all. Suzuki mehran at a price tag of PKR 0.8Million is a day time robbery from the middle class buyers. I strongly suggest the CEO of the Suzuki in Pakistan must use suzki mehran for one month then they will realize what they are selling. last but not the least – if suzuki was producing a quality products and in adequate quantity then Pakistan might not need any import of used vehicle – adding burden on current account deficit. Recommend

  • Muhammad Nadeem
    Dec 7, 2018 - 5:51PM

    They should not allowed to benefit from the new policy as it would a great injustice to the new entrants..The trio Suzuki Honda Toyota has sucked enough blood of simple Pakistani folks for the last 30 years and they should never be given any undue favors…Recommend

  • just do it.
    Dec 7, 2018 - 6:08PM

    Double standards, not fair. About time Pakistan started to make cars from scratch, get rid of importing, and start planning, designing, researching, manufacturing cars, Pakistan has potential so use this potential to the maximum extent. Recommend

  • xak
    Dec 8, 2018 - 1:03AM

    Giving Suzuki or Honda or Toyota anymore umbrella sounds so stupid. For decades they held hostage this country and transferred wealth to their hometowns, not investing a dime in local infrastructure and people. The most disturbing part is, who in the world would be keen to bank on $450 million vs $ 3 billion ??? Can anyone explain the mathematical equation to the government.Recommend

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