Auto policy: Tariff protection plan likely to new players
The new auto policy may open up market for new entrants, effectively doing away with local monopolies.
Existing car manufacturers are lobbying to impose ban on used cars which could lead to further increase in prices. PHOTO: FILE
ISLAMABAD:
The government is considering introducing a tariff protection plan for new entrants in the automobile manufacturing sector in auto policy 2013, to break the monopoly of existing players.
“We may give tariff protection for five or seven years to new entrants in the auto industry to break the monopoly of existing players who are fleecing consumers by selling vehicles based on obsolete technology at high prices,” sources said, adding that the government now wants to create an environment of competition by bringing more auto players in Pakistan which may result in decline in vehicle prices.
Officials said that other countries had many players in their auto industries, because of which prices are kept low, unlike in Pakistan where due to the controlling share of a few players prices are generally high. He said that the government had introduced a policy for new entrants in the motorcycle industry, and had a plan for car manufacturers which will bring new investment in Pakistan.
The government decided to introduce a new auto policy after it noticed that despite enjoying incentives from the government, car assemblers continue to sell at high prices. They are also earning hefty profits on the advance deposited by consumers before their cars are even delivered.
In a meeting held on October 2, the Economic Coordination Committee (ECC) of the cabinet criticised car assemblers, saying they had been getting incentives for several years but did not meet the commitment to the government.
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, and should meet requirements of a long-term policy framework. 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, chairman Board of Investment, chairman Federal Board of Revenue, industries secretary and chief executive Engineering Development Board to finalise the policy draft within 45 days and submit it to the committee.
Official said that the committee was considering different proposals and a meeting would be held soon with stakeholders to give final shapes to the new auto policy.
Existing car manufacturers are lobbying to impose ban on used cars which could lead to further increase in prices. However officials said that the government had no plan to impose a ban on used cars.
He said that car manufacturers had been earning huge profits on the advance money deposited by consumers. Now, the government is working on a plan to reduce time of delivery so that consumers are not exploited.
The apex economic decision-making body in its meeting held on October 2 had expressed concern that 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.
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 timeframe. Moreover, the meeting noted that products of the assemblers were costly and based on obsolete technology.
Published in The Express Tribune, November 15th, 2013.
The government is considering introducing a tariff protection plan for new entrants in the automobile manufacturing sector in auto policy 2013, to break the monopoly of existing players.
“We may give tariff protection for five or seven years to new entrants in the auto industry to break the monopoly of existing players who are fleecing consumers by selling vehicles based on obsolete technology at high prices,” sources said, adding that the government now wants to create an environment of competition by bringing more auto players in Pakistan which may result in decline in vehicle prices.
Officials said that other countries had many players in their auto industries, because of which prices are kept low, unlike in Pakistan where due to the controlling share of a few players prices are generally high. He said that the government had introduced a policy for new entrants in the motorcycle industry, and had a plan for car manufacturers which will bring new investment in Pakistan.
The government decided to introduce a new auto policy after it noticed that despite enjoying incentives from the government, car assemblers continue to sell at high prices. They are also earning hefty profits on the advance deposited by consumers before their cars are even delivered.
In a meeting held on October 2, the Economic Coordination Committee (ECC) of the cabinet criticised car assemblers, saying they had been getting incentives for several years but did not meet the commitment to the government.
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, and should meet requirements of a long-term policy framework. 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, chairman Board of Investment, chairman Federal Board of Revenue, industries secretary and chief executive Engineering Development Board to finalise the policy draft within 45 days and submit it to the committee.
Official said that the committee was considering different proposals and a meeting would be held soon with stakeholders to give final shapes to the new auto policy.
Existing car manufacturers are lobbying to impose ban on used cars which could lead to further increase in prices. However officials said that the government had no plan to impose a ban on used cars.
He said that car manufacturers had been earning huge profits on the advance money deposited by consumers. Now, the government is working on a plan to reduce time of delivery so that consumers are not exploited.
The apex economic decision-making body in its meeting held on October 2 had expressed concern that 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.
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 timeframe. Moreover, the meeting noted that products of the assemblers were costly and based on obsolete technology.
Published in The Express Tribune, November 15th, 2013.