The country's auto sector, including the three Japanese car assemblers, have reportedly rejected the new still "veiled" auto policy, saying it will be a non-starter, sources close to Secretary Industries and Production told Business Recorder.
Pakistan Automotive Manufacturers Association (PAMA), a representative body of car assemblers, dominated by M/s Toyota and M/s Suzuki, are unhappy with the government for not taking the auto sector on board.
The Association has cited the reference of a story of Business Recorder that appeared on October 21, 2015 according to which, several Engineering Development Board (EDB) incorporated amendments to the draft of the policy are anti industry.
PAMA had raised the issue of controversial amendments through a letter on October 13, 2015 but the Ministry has yet to respond to the concerns of the industry.
Insiders told Business Recorder that Chief Executive Officer (CEO) EDB, Tariq Ijaz Chaudhary who recently visited the plants of M/s Indus Motors and M/s Suzuki, is allegedly siding with Chairman Privatisation Commission (PC)/Deputy Convenor of the sub-committee, Muhammad Zubair, whereas Chairman FBR and Chairman Board of Investment (BoI) are following the instructions of Finance Minister.
The activities of EDB are supposedly overseen by the Board of Directors (BoD), which is also represented by the private sector. However, according to one board member, the board has not met so far and he was unaware of what was happening in the EDB.
According to the rules, the appointment of CEO of any public sector company is to be ratified by the Board.
The Association said that recently there has been conflicting news with respect to the auto matter focusing on what has been going on between various government departments thereby brewing uncertainty as to what was in store for the auto industry of the country. This is yet another instance of compounding the uncertainty because what is reported has further diminished clarity, particularly with regard to proposed new incentives, the Association noted.
"We have been approaching the Ministry again and again to be able to participate in the process for the benefit to have a worthwhile policy for the country and for the reasons of being a stakeholder in the matter. Unfortunately, however, years have passed and to date we have heard nothing from the government. The near final version of the policy that has apparently been reported in Business Recorder has rightly been titled "Auto Policy still quite vague" as the proposed incentives under various categories have not been clearly defined, besides, there are other ambiguities of sorts," said Abdul Waheed Khan, Director General PAMA. A copy of the letter has also been sent to Chairman PAMA, Pervaz Ghias, who is also the CEO of Indus Motors.
Local industry has reiterated that while it fully welcomes new entrants in the field of automobiles but with a caveat: to earnestly protect their legitimate interests which run in billions of rupees investment in men and materials thereby providing jobs to millions and paying revenue to the government.
"We urge on Secretary Industries and Production again to allow the industry to have participation in the auto policy while its draft is being finalised lest it may have anything discriminatory, as feared in the press report, which may, sadly, end up a non-starter from the start," the letter added.
One prominent member of PAAPAM from Lahore, Syed Nabeel Hashmi, said the story that appeared in Business Recorder is accurate. However, he said the main issue is creation of employment in the country.
He was of the view that Green field and Brown field investments are supportive of the assemblers' investments only and do not create large scale employment or bring in technology.
"The policy has ignored parts manufacturers who are supposed to be the actual beneficiaries of the policy and are the only ones that can create heavy employment. The policy presumes that once the OEM's come in the downstream will automatically grow. With these new special tariffs and incentives the trend would mostly be towards importing and assembling," he added.
Hashmi further questioned as to what will happen if the presumed trickledown effect does not materialise. The policy does not guarantee this, he said adding that the jobs would not be in Pakistan but abroad and the fiscal benefits being doled out by the GoP will in fact be creating jobs abroad rather than in Pakistan.
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