Draft auto policy 2015-20: EDB, Japanese embassy, assemblers oppose FBR, BoI views

Engineering Development Board (EDB), a subsidiary of Ministry of Industries and Production (MoI&P), Japanese embassy and local auto assemblers have a common viewpoint on the draft auto policy 2015-20 and oppose the views of Federal Board of Revenue (FBR) and Board of Investment (BoI).
Chief Executive Officer (CEO), EDB, Tariq Ejaz Chaudhary who has termed the draft auto policy "discriminatory" visited Japan a few days ahead of the Japanese delegation that visited Islamabad and also termed the auto policy "discriminatory".
An official who was part of the deliberations with the Japanese delegation told this scribe that the Japanese were furious at the draft auto policy which is yet to be finalised by a sub-committee headed by the Minister for Water and Power Khawaja and his Deputy, Muhammad Zubair, Chairman Privatisation Commission.
"The existing manufacturers represent the top three Japanese automobile industries. There could be a diplomatic uproar if they are excluded from the benefits of the new policy. Japanese ambassador has personally been in touch at the highest levels of the government to provide input for the draft policy," reveals official documents of Ministry of Industries.
The role of Finance Minister, Senator Ishaq Dar who has held a number of meetings with the Japanese ambassador on auto policy is very important as he Chairs the ECC- a forum which has to give final approval to the policy.
According to the official, Pakistani team assured the Japanese side that the new auto policy will be issued as soon as it is finalised.
The Japanese delegation headed by a Vice Minister for Economy made it clear that Japan will not support any discriminator policy and requested the Pakistani side to ensure that there is no discrimination between the new investors and the existing manufacturers in the new ADP.
Pakistani officials assured the Japanese delegation that they will raise this issue at the appropriate forum.
Insiders claim that Chairman Federal Board of Revenue (FBR) Tariq Bajwa has taken a strong stance that current auto assemblers do not deserve fiscal incentives that should be offered to the new entrants until they set up new units for other than existing models.
His viewpoint is being supported by the convenor of the sub-committee Khawaja Asif but not by Chairman Privatisation Commission, Muhammad Zubair. CEO EDB, Tariq Ejaz Chaudhary and Muhammad Zubair are on the same page. Both have close liaison with the auto sector players.
However, Chairman Board of Investment, Dr Mifta Ismail has a different viewpoint on the issue of incentives. He wants both the existing assemblers and new entrants to be offered incentives but argues that the level of incentives should be different.
In October 2015, a meeting was convened in the office of Minister for Water and Power to evolve consensus on the auto policy in the absence of Chairman FBR, Tariq Bajwa and Chairman BoI, Dr Mifta Ismail however Minister for Water and Power, Khawaja Asif refused to proceed until Chairmen FBR and BoI are not present in the meeting.
Ministry of Industries and Production argue that the objective of the draft policy is to attract new investors and create healthy competition.
The policy should not at the same time seem to be discriminatory.
It should not really matter at all where the investment comes from- whether it is from new investors or the existing players in the market.