Not a single car manufacturer in the country had been able to complete its deletion programme even after extension in the time frame. PHOTO: FILE
Despite enjoying incentives from the government, car assemblers are fleecing consumers by selling vehicles based on obsolete technology at high prices and are also earning hefty profits on the advance deposited by the consumers before delivery of cars.
In a meeting held on October 2, the Economic Coordination Committee (ECC) of cabinet criticised car assemblers, saying they had been getting incentives for several years but did not meet the commitment to the government.
The apex economic decision-making body expressed concern when meeting participants said the car assemblers were exploiting the consumers as they were unduly keeping the latter’s advance for several months and earning profits on that before actual delivery.
According to documents, the ECC took notice of negative growth in the automobile sector, which had not been recording any growth for many years notwithstanding a host of incentives provided by the government.
Not a single car manufacturer in the country had been able to complete its deletion programme even after extension in the time frame.
Moreover, the meeting noted that products of the assemblers were costly and based on obsolete technology.
The meeting was told that an auto policy was being formulated and its first draft was ready. The ECC, however, stressed that the draft should be based on a thorough review of the facilities being offered to the auto industry, the need for new entrants, existing duty structure for import of motor vehicles, standards set by the Engineering Development Board, requirement of a long-term policy framework, etc.
The draft should also take into account proposals from the assemblers, dealers and vendors of the auto industry, it said.
The ECC decided to constitute a committee comprising the minister of water and power, Board of Investment chairman, Federal Board of Revenue chairman, industries secretary and Engineering Development Board chief executive to finalise the policy draft within 45 days and submit it to the committee.
The meeting participants told the ECC that large-scale manufacturing sector performed better and grew 3.7% in July this year compared to 0.1% growth in the same period last year.
The goods which recorded an increase in their production were paper and board, rubber products, coke, petroleum products, beverages and tobacco, fertilisers, electronics, engineering products, automobiles, iron and steel products, leather products, non-metallic mineral products and chemicals.
Exports rose 3.3% while imports increased 5.7%. As a result, trade deficit was $2.9 billion in July compared to $2.6 billion in the corresponding period last year.
Published in The Express Tribune, October 9th, 2013.
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COMMENTS (14)
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The local assemblers are corrupt and they have passed no real advantage to consumers. That's why we made Fraudulent Car Industry of Pakistan group on Facebook to share similar point of views and we write about them off and on in newspapers. Mehran is 20 years old. Toyota only assembles one sedan. There are no locally assembled 1000, 800, 660 cc options for Pakistani customers (forget Suzuki as it's extremely sub standard). If customers are buying 5 year old imports rather than brand new locals then the government must see that as a Red Alert highlighting that the local assemblers have frustrated us beyond expectations.
First of all, importing cars will not help the country's manufacturing base whatsoever. Additionally, the sales volume in Pakistan is too low for companies to be profitable, producing such investment-heavy products. While government incentives are clearly helpful, they are never enough to offset investment. If we continue to incentivize imports, we will lose what little manufacturing we have left in the country. We should have policies that encourage the local industry....that is what creates jobs. Imports of used products will further erode incentives for these companies to invest in newer technologies, models, etc. Preferring imports to local manufacture is a very short-sighted strategy.
@raj, tell me something. Did you guys manage to arrange decent toilets for half of your illiterate (thats half a billion!) defecating-in-open-air population? Half of your population sleeps hungry every night as they struggle to earn more than 1$ per day. Read that article by the British diplomat who stayed in both countries. He has some insightful views :)
@Khan: when we check corruption index pak leads .... check out ...!!
@Ghostrider: Pakistan is a member of WTO. This means it has to give MFN to all participating countries. By refusing it, India, can take you to WTO where you will be thrown out of it and cannot avail preferential exports to other countries. Do you that? Zero exports from Pakistan?
@raj:
What brings you to the website of a failed state's paper
What consumers and the government usually forget is that there needs to be a positive atmosphere for any industry to grow. The auto industry is considered the leading engineering industry in the world and is given due respect and support. The auto industry in Pakistan has been punished like most and abused by the past governments for their own cronies to run their import/smuggling business. This is not to say that the assemblers are not abusing the situation too. Reforms are needed much like anyplace else...i would say give the consumer protection bodies enough powers and have them led by ethical visionary people who can tackle the old dinosaurs and also lead the industry out of this mess and give us consumers a better car at a better price with a better choice..
@raj, Dont forget the huge corruption in India.
@raj: Bollywood has made you guys spacey :)...if Pakistan is a failed state due to TTP insurgency then india is a doomed state due to Naxal insurgency and Kashmir. BTW then why is your business community dying to get MFN status???
I think even a mechanic on the street know this. Question is why are tax payers are over-paying you for stating the obvious.
Please allow Pakistan diaspora, to invest in an micro way, allowing us to import cars at a reasonably price ?
Open up the market to car imports. Three decades have passed and local manufacturers are still ripping Pakistani consumers off.
companies only use pakistan for assembling ..... they dont c point in manufacturing in a failed state.....:)