Withholding notification on reduction in age of used cars: MoC concerned over NA body recommendations

Ministry of Commerce (MoC) is reportedly deeply concerned over the recommendation of the National Assembly's Standing Committee on Finance to withhold notification on reducing the age of imported used cars from five to three years.
Economic Co-ordination Committee (ECC) of the Cabinet presided over by the Finance Minister Dr Abdul Hafeez Shaikh approved reduction in age of imported used cars on a summary moved by the Ministry of Industries (MoI) which shocked importers as well as the general public deprived of their legitimate right to choose on November 24, 2012.
On December 4, 2012, National Assembly's Standing Committee on Finance, headed by Khawaja Sohail Mansoor of MQM did not support the ECC decision and recommended to the Commerce Ministry not to issue the notification until auto sector study being conducted by the National Tariff Commission (NTC) and Competition Commission of Pakistan (CCP) is complete. The committee, considered a recommendatory body, gave clear instructions to the Ministry concerned to withhold the notification. However the Ministry is of the considered view that as ECC is a higher forum compared to the committee, notification cannot be withheld.
One group of analysts suggested that Commerce Ministry should seek guidance from the ECC based on the instructions of Standing Committee whereas some officials argue that the Ministry should approach Ministry of Law and Justice for comments prior to issuance of notification.
Officials in Commerce Ministry also pointed out that the sub committee is headed by Deputy Prime Minister, Chaudhry Pervez Elahi who had clubbed reduction in age limit of imported used cars from five to three years to a reduction in price of locally manufactured cars from Rs 50,000 to Rs 100,000 per car which did not take place.
Engineering Development Board (EDB) supports local assemblers' viewpoint despite the fact they did not achieve deletion targets, and the main accused of which is EDB itself. The item-wise deletion levels achieved by OEMs up till 2003-04 for different vehicles are as follows: cars 59-70.5 per cent, light commercial vehicles 54-70.5 percent, motorcycles 63-86 percent, tractors 85 percent, buses 47-50 percent and trucks 47-55 percent. The organisation is now headed by the close relative of incumbent Secretary Industries, Shafqat Naghmi. He was severely criticised by the members of the Standing Committee who also accused him of being a representative of assemblers instead of a government of employee. EDB further argues that the members of the Standing Committee did not have an open mind which is why they did not hear the organisation's stance.
According to insiders, Senior Commerce Minister, Makhdoom Amin Fahim and Acting Secretary Commerce, Munir Qureshi recently met with one of the biggest car assemblers wherein he conveyed in clear terms to the local assemblers to review their prices. "Munir Qureshi told them that reduction in age limit of used imported cars will not happen as long as he is in the Commerce Ministry. The car assembler in turn asked him if his objective was to close down the industry," claimed an official who was present in that meeting. He, however, requested not to quote his name. According to him, after failing to gain support from Commerce Ministry, the car assembler knocked on other doors and ultimately got a favourable decision.
Ministry of Industry argues that if the government implements the ECC decision the future of 400 vendors will be at stake who employ up to 40,000 skilled workers. Pakistan Automobile Manufactures Association (PAMA) claims that import of five year used cars is causing up to Rs 30 billion financial loss to the local industry per annum.
PAMA had recommended that allowable age of used vehicles should be reduced from five to three years and maximum allowable depreciation should be reduced to 36 percent from 60 percent. The Association also suggested that certification by Japan Appraisal Institute (JAAI) with respect to vehicle condition and durability should be mandatory condition for import of used vehicles.