A high-level panel headed by Minister for Water and Power, Khawaja Muhammad Asif, which has been assigned to draft the new auto policy, will meet with the representatives of auto sector including auto parts makers on Monday (tomorrow), well-informed sources told Business Recorder.
Khawaja Asif, one of the critics of the auto sector as member of Public Accounts Committee (PAC) during the previous government, will finalise the auto sector policy to be submitted to the Economic Co-ordination Committee (ECC) of the Cabinet in a few weeks. Board of Investment (BoI) Chairman Muhammad Zubair, Federal Board of Revenue (FBR) Chairman Tariq Bajwa and Chief Executive Officer (CEO) Engineering Development Board (EDB) are members of the committee.
The sources said local car assemblers have increased prices by 100 percent during last four years under the guise of rupee devaluation. According to the notice issued by the EDB, the meeting will elicit proposals and solicit coinsurance of the stakeholders.
The EDB has also invited Chairman All Pakistan Motor Dealers Association (APMDA), H M Shahzad for his views on import of used cars. Insiders claim that the car assemblers have not achieved the deletion programme agreed with the Government of Pakistan (GoP) in letter and spirit and instead there was some rollback since the introduction of Tariff Based System (TBS). "Same parts as in the 60s are deleted. No a single function engine, gearbox or electrical part is manufactured by vendors," insiders added.
The ECC was informed on October 2, 2103 that not a single car manufacturer in the country has completed its deletion programme. Official documents further disclose that an auto industry policy was being formulated and its first draft was ready. The ECC, however, observed that the draft policy should be based on thorough review of the existing facilities being offered to the auto industry, the need for new entrants in the sector, the existing duty structure on import of motor vehicles, the EDB standards, the requirement of a long-term policy framework, etc.
Booking is done on 100 percent advance payment with delivery after 4-6 months. Taxes are, however, transferred to the government at the time of delivery. "Local industry sold 170,000 vehicles last year and received Rs 130 billion on this account which is considered sufficient to finance the entire operations of assemblers," said one the insiders of auto sector. The ECC expressed concern that this sector was not showing any growth for many years notwithstanding a number of incentives given by the government.
Under the TBS, parts are now freely imported from third countries - Thailand, Malaysia, China and Singapore, etc. Official documents further reveal that all engineering sectors other than auto sector are Trade Related Investment Measures (TRIMS) compliant since 2001. In auto sector, as per the WTO's requirement, the deletion programmes (compulsory local content requirement) have been phased out and replaced in 2006 by Tariff Based System which is TRIMs-compliant.