The automobile industry would get nothing from the Trade Policy 2006-07 as none of its proposals was incorporated in it. Sources told Business Recorder that the industry had forwarded a number of proposals ranging from reduction in depreciation allowance from 2 to 1 percent.
Which means high duty on the import of used-cars, and making mandatory at least three-month registration prior to import of used-car in the name importer under transfer of residence scheme.
The representatives of the industry, during a meeting with the committee constituted by the prime minister Aziz with Dr Akram Sheikh, deputy chairman, Planning Commission, in the chair, have taken up these issues and forwarded their proposals for incorporation in the policy.
They contended that the TR scheme was being misused by the old cars importers for commercial purpose and consequently, staked auto industry's expansion program following huge influx of used cars in local market that has squeezed market for new cars.
The industry has also demanded of the government to reinstate 2004-05 rules and conditions for the import of used cars to realise the industry's expansion plans for raising the production to 0.5 million by the year 2010-11.
The industry said it was worried about the import of used cars under the TR, personal baggage and gift schemes which surpassed 45,000 at the end of 2005-06 from the 11,000 of previous year. The production of local cars during 2005-06 which stood at 160,000 in 2005-06, can be raised to 200,000 subject to the demand.
Similarly, the representative also gave proposals for the import of used buses under the personal baggage, transfer of residence and gift schemes, the attestation of vehicle registration book by Pakistan missions abroad, original certificate for cancellation of registration in the country of origin showing the year of manufacture and first registration and registration of the vehicle in Pakistan in the name of importer only be made mandatory.
Pakistan Automotive Manufacturing Association (PAMA) Chairman Kanwar Idrees in a letter dated July 13 addressed to the commerce minister, said the industry was threatened by the huge influx of used cars.
He said an investment of Rs 29 billion has been made during the past five year for capacity expansion, increase the production of cars from 40,000 in 2000-01 to 160,000 in 2005-06 and an investment of Rs 38 billion over next five years is in the pipeline. However, he said the companies were reluctant to make investment unless their reservations were properly addressed.
When the consultant of Pama was asked as to what the government has done to meet the yawning demand-supply gap that the local car manufacturers have failed to bridge, he said the government should have allowed import of used cars with some restraint. The government, however, says that demand-supply gap left it with no other option but to allow import of used cars. An official in the government was of the view that the auto manufacturers were not manufacturing as per their full capacity.
It may be recalled that Prime Minister Shaukat Aziz has constituted a high-level committee comprising Planning Commission Deputy Chairman Dr Akram Sheikh, Industries and Production Secretary Kamran Rasool, and Central Board of Revenue (CBR) Chairman Abdullah Yousaf to prepare a 10-year plan for the growth of local auto sector.
The primary thrust of Pakistan Automobile Industry Development Plan (PAIDP) would be to encourage local manufacturers to increase investment by 100 percent to meet the local demand and grab international market share through enhancing their capacity.
Under the plan, manufacturers will be given a target of 0.5 million cars and one million motorcycles' production by the end of 2010-11.
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