Manufacturers against import of old trucks, buses: waste of investment feared

Any change in the current policy that would allow import of more than five years old trucks and buses, even after payment of 30 percent penalty, may jeopardise the Rs 5 billion investment in commercial vehicles manufacturing plants and over Rs 8 billion vendors' investment in the country.
According to truck manufacturers, the policy announced in July 2005-06 for liberal import of used trucks and buses has caused loss of sales revenue to the tune of Rs 16 billion to local manufacturers, and Rs 8 billion to vendors. In addition, 0.3 million new job opportunities with the manufacturers and vendors were lost.
Following the announcement of government policy the import of used trucks swelled to over 11,000 vehicles, while sales of locally produced trucks dropped to only 7,400. This meant that the number of vehicles imported was more than vehicles produced locally. In the same period, over 1,200 used buses were also imported, against local production of 1,500 buses.
According to manufacturers, commercial vehicles industry is one of the oldest industries in Pakistan. Trucks and buses were being produced in the plant of General Motors in 1954. At that time, the government had patronised this nascent industry to the extent of restricting one or more trucks and buses under the gift scheme with the condition that such imported trucks should not be more than two years old.
The importer was required to present documents, such as earning certificate and registration book of imported vehicle, to determine the age of the vehicle. In 1993, minor changes in the import policy were made. In 2000, import conditions were slightly modified, waiving the two-year-old condition under 'Transfer of Residence' (TR) scheme, but requiring vehicle registration in the name of the importer one year before departure for Pakistan.
Much to the disappointment of local manufacturers, the rules for import of vehicles were grossly changed in July 2005 whereby import of used trucks and buses wass allowed and the condition for registration of the vehicle in the name of the applicant for one year before departure for Pakistan was also waived. The condition of registration documents of the vehicles to be attested by Pakistan embassy, too, was also withdrawn.
In July 2006, although import of vehicles even under TR scheme was restricted only to five-year olds, an SRO was issued allowing clearance of illegally imported vehicles on payment of 30 percent additional duty as fine. This opened floodgates for import of even very old trucks and buses, with all types of description and models, with no guarantee of availability of parts and service facilities.
However, the decision to change the rules was eventually withdrawn upon constant protests by vehicle manufacturers and a new SRO was issued on March 17, 2007 disallowing import of vehicles more than five years old. Such vehicles cannot be imported even after payment of 30 percent penalty.
Manufacturers have appealed that the current policy must be continued to save the truck industry from disaster and to encourage it to play its due role in meeting the needs of a growing economy.
Their plea is that the world is heading towards friendly environment and vehicles are produced with euro-compliant engines to reduce pollution. They have described recent introduction of buses in Pakistan operating on natural gas engine as a welcome step in the right direction. Once a large number of such buses ply in the city, pollution intensity would greatly come down and create an environment healthy for those who live in towns.
Import of 10 to 15 years old used vehicles with non-euro-compliant engines would be a step in reverse direction, and operation of such vehicles would create pollution and cause serious health risks, they say.
The manufacturers emphasised that since they were focusing on euro-standard vehicles and multi-axle trucks to meet the demands of new trade corridors requiring expansion in plant facilities, high investment in machinery aand equipment, massive training in skills for technology transfer, it was important that the current policy of stopping smuggling of used trucks and buses should continue uninterrupted.
They say that the government should come up with a long-duration firm policy in this regard to discourage vested quarters active in lobbying for import of about 10,000 used trucks so that the investors' confidence is reinforced and local manufacturers' determination is boosted to build up and support the efforts to modernise the trucking sector.