Japanese government is likely to react very strongly to the "discriminatory" auto policy approved by the Economic Co-ordination Committee of the Cabinet headed by Finance Minister Ishaq Dar. Well informed sources told Business Recorder that Japanese ambassador to Pakistan has already conveyed that any discrimination in Auto Policy with Japanese companies ie Suzuki, Honda and Toyota will not be acceptable to Japan.
The existing key assemblers - M/s Toyota, M/s Honda and M/s Suzuki - had refused to give an assurance of new investment until government extends similar incentives being offered to new entrants. M/s Suzuki has already submitted an investment plan to the federal government which is conditional to incentives at par with new entrants.
"There could be a diplomatic uproar as existing OEMs have been excluded from the benefits of the new auto policy. Former Japanese ambassador has personally been in touch at the highest levels of the government to provide input for the draft auto policy," claims an official on condition of anonymity. He had sought level playing field for the existing OEMs. Giving inside details of ECC meeting, sources said that the Finance Minister, who is also chairman of the ECC announced in clear terms that the policy will be approved in this meeting at any cost and if any change is required the same can be incorporated later as policy will be implemented from July 1, 2016.
According to sources, Minister for Water and Power, Khawaja Asif, who is also Chairman of committee on auto policy, spoke against the existing players, saying that they have "looted" the consumers with both hands and they don't deserve any incentive. However, Minister for Petroleum and Natural Resources, Shahid Khaqan Abbasi took a stance against Khawaja Asif. He was of the view that if incentives are not given to existing OEMs, new investment cannot be attracted. New entrants will take time to set up plants whereas existing players can deliver immediately.
The sources further stated that the presentation prepared by the Board of Investment (BoI) on auto policy confused the entire ECC members as the presentation was a mixture of BoI "intelligence" and Engineering Development Board's (EDB) old-fashioned work. The sources disclosed that the Finance Minister said that he has doubts about the PHD degree of Dr Miftah Ismail, Chairman BoI. Secretary BoI, Azhar Ali Chaudhary, opted to keep quiet because BoI did not mention used cars policy, standardisation and consumers' protection.
Dar asked whether Dr Miftah is speaking about annexures 14 and 15. He replied in the affirmative, saying that this is the same policy. The revelation created a rumpus among members who started questioning the quality of presentation. Dar directed Dr Miftah to sit with Ministry of Industries and Production, bring it in a proper shape and announce it on Monday.
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