LAHORE: Pakistan Automotive Manufacturers Association (Pama) has told the government that the violation of used car import policy will dent the confidence of new investors and may jeopardise existing and further investment in the country.
In a letter addressed to Minister for Industries Hammad Azhar, the director-general of Pama conveyed the auto industry’s concern over any relaxation in the used car import policy in response to the demand from used car dealers. He highlighted the adverse and far-reaching consequences for the domestic auto industry which, he said, was producing all sorts of automobiles and capable of meeting all local needs.
“Currently, more capacity is being added to the local auto industry as new entrants including KIA, Hyundai, Datsun and others emerge under the new auto policy,” he added.
“Thus, soon the installed capacity will be far beyond the local demand, rendering all imports unwanted, costly and contrary to the interest of the country. Nonetheless, auto parts making has kept expanding with technology transfer to such an extent that now we have thousands of tier-I to tier-III parts suppliers in the country,” stated the Pama official.
Until recently, he added, many dealers were illegally importing used cars by abusing the policy meant for overseas Pakistanis and caused a massive flight of foreign exchange through illegal channels of Hundi and Hawala.
He stressed that the domestic industry had been a victim of injustice as a substantial (about 30%) market share was allowed to the imported used vehicles. The current Auto Industry Development Policy (AIDP 2016-21) considered the malpractice and a full chapter (Chapter Five) was devoted to regulating the import of used vehicles and the Ministry of Industries issued a notification dated June 2, 2016 in that regard, he said.
“It was in response to this policy that so many new entrants positively responded and made huge investments. Therefore, going against the policy will devastate the confidence of new investors and may jeopardise the existing and further investment in the country,” the letter said.
Highlighting the damaging effect of the misuse of policy, the Pama director-general mentioned that illegal remittance of foreign exchange worth $2 billion was being carried out every year, which attracted the attention of Financial Action Task Force (FATF).
Published in The Express Tribune, June 11th, 2020.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
COMMENTS (1)
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ