A special committee of Public Accounts Committee (PAC) remained inconclusive on who forced Prime Minister Yousaf Raza Gilani to revert the decision that 5-year-old cars could be imported after local auto manufacturers had categorically denied to have any meeting with the Premier.
The Ministry of Industry informed the special committee of Public Accounts Committee on Friday that the ministry of commerce was directed by the prime minister not to act upon the commerce ministry notification issued on December 8, 2010. This SRO extended the 3-year relaxation to 5 years under transfer of residence, personal baggage and gift in case of used cars schemes.
Giving reasons, Additional Secretary, Ministry of Industry, said that it were manufacturers who had approached the prime minister and pleaded to do away with this decision, as it was harmful for the local auto industry. Local manufacturers also urged him that they had not been fully consulted on rationalisation of vehicles' prices.
Subsequently, the association of car manufacturers challenged the ministry of industry's claim, categorically denying any meeting with the prime minister. Chief Executive of Sigma Motors, Zafar Uddine Ahmed, said that the association did not meet or contact prime minister on import of used cars, and this impression was wrong.
He further said that the association has been opposing the proposal because it was against the interests of the country and local manufacturers. "We asked the government to relax new entrance policy to allow new investment in auto sector to encourage competition", he said. After their denial, this question attracted the committee members' attention as to who forced the prime minister to take a U-turn on early decision to extend the relaxation limit on import of used cars up to 5 years.
The Additional Secretary, Ministry of Commerce, Shahid Rahim Sheikh, however, contended that a fresh summary relating to relaxation on imported cars was prepared by a committee constituted by the Cabinet. The committee comprises Ministry of Industry, Federal Board of Revenue and Ministry of Commerce. This summary would be placed in the next ECC meeting, which is yet to be convened. The Cabinet, in principle, has approved the import of second hand 5-year old vehicles.
The official of Ministry of Industry and Production further informed the committee that the summary, which was earlier approved by ECC, had the input of only ministry of industry. The fresh summary is a consensus document of all relevant ministries and departments. The members of PAC criticised the decision of the prime minister and termed it 'anti-consumer'. Chairman of Committee, Mhammad Asif, said it was a wrong decision of the prime minister.
The official of the ministry of industry said that the proposed change in the age limit of cars and other vehicles from existing 3 years to 5 years would be an effective tool to reduce the prices of locally manufactured cars, without adversely affecting the local assemblers, for the reason that landed cost of 3 years to 5 years old cars is not much lower than the price of locally made new cars of equal capacity. Asif also criticised the auto sector for fleecing the consumers and cartelisation. He asked the Competition Commission of Pakistan (CCP) to conduct a study on auto sector and submit its report by middle of February.