Concern: Car makers fear new auto policy could open up imports

Say their input has not been taken while framing the new policy.

LAHORE:

The auto industry policy, which expired in 2012, is still awaiting renewal and has been sent to the Economic Coordination Committee (ECC) for approval. However, industry players claim that they have not been consulted in the process of drafting the new policy.

“We fear that the draft could tilt in favour of opening up imports for everyone and it is obvious that trade lobbies have had their say,” said a source in the auto industry. “The manufacturing sector has not been involved in the discussions.”



The first auto policy was framed in 2007, when the local industry notched up a growth of 15% and started contributing 2.5% to gross domestic product. That policy considered the opinions of all stakeholders.

However, the Pakistan Automotive Manufacturers Association (Pama) – the major stakeholders in the industry – claims they have no clue what will feature in the new policy.

In the 16th meeting of the Auto Industry Development Committee (AIDC) on August 20, 2013, it was stated that the focus of the policy was on giving approval to new projects and investments.

“Some old companies have registered themselves with new names only to get duty concessions, we have reservations about this,” said the source.

According to the minutes of the meeting, the participants were of the view that if one company was using the facilities of another company for vehicle manufacturing (contract manufacturing), it should be ascertained whether the company was originally a new entrant or the same entity with a new name.

The minutes further stated, “It was decided that another exclusive meeting should be convened early to deliberate on various issues pertaining to qualifying new entrants as per SRO 1098(I)/2011 and decisions with regard to facilitating genuine investments.”

In spite of the obvious reservations of participants about the merits of the case, the decision was taken by the chair to grant approval to the new entrants, which were using new names for a cover to get remission in duty and taxes.

“It does not require much imagination to realise what is going on in the name of the new entrant policy,” said the source.

“In the same meeting, a company, which proposed to introduce three new trucks, got the status of a new entrant. However, it was already in possession of a manufacturing certificate to produce three-wheeler rickshaws and motorcycles – both non-performers in the auto sector.

“This proposal for contract manufacturing means that significant investment will not be coming in and it will be easy to gain huge benefits by way of remission in taxes and duties.”

Pama Managing Director Abdul Waheed said, “The government is making the auto policy without consultations and we wonder how it will work without the opinions of genuine stakeholders of the industry.”

For Waheed, their proposals for the new policy have not been considered by the authorities and the other proposals will just help some old names to re-register with a new name only to take policy benefits while making little or no investment.

Published in The Express Tribune, October 11^th, 2014.

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