The Auto Industry Development Committee (AIDC) in its 26th meeting held on Wednesday approved initiating a review of the Auto Development Policy 2016-21 amid growing apprehensions that it favours one specific party, well-informed sources told Business Recorder. The meeting was presided over by the acting Chief Executive Officer (CEO) Engineering Development Board (EDB) Mirza Nasir Baig.
The sources said some of the AIDC members expressed resentment at the initiation of the ADP review process well before the timeline stipulated in the policy itself and beyond the scope allowed in the policy. The policy has clearly given the timeline when such a review is due and has also identified areas that can be reviewed.
The participants maintain that a very powerful stakeholder has extended considerable influence on the EDB - an entity that the incumbent Prime Minister wants to dissolve due to rampant corruption, the sources continued. Ministry of Industries and Production (MoI&P) has sent a summary to the Prime Minister to retain EDB, which still has no legal status. Minister for Industries and Production, Ghulam Murtaza Khan Jatoi, however, is in favour of dissolving EDB and transfer its functions to other concerned Ministries.
While defining the roles and responsibilities of AIDC the Auto Development Policy clearly states in the policy document on page 87, chapter 10: "AIDC shall provide a vision for the development of the auto sector and will continue reviewing the progress, effectiveness of incentive regime and to recommend corrections and improvements in the ADP wherever necessary".
However, agenda item number five issued by EDB states that "ADP 2016 - 21 empowered the AIDC and EDB to review results of the new investor policy once every two years and recommend modifications, if required". According to sources, a committee comprising four government officers has been proposed to carry out the review.
Some of the participants argued that practically EDB has transferred the authority to review to itself and the officers of the Ministry. Secondly, the two-year review clause ('New Investment Policy' 4.3 eligibility criteria) is specific to the eligibility criteria of the new investor. It states that "AIDC and EDB shall review results of the new investment policy once every two years and shall recommend modifications, if any".
There was something going on in the background that is not clear at this stage, said one of the participants, adding that the policy was issued for a period of 5 years starting July 1, 2016 and changing the policy at this stage will shake investor confidence. The meeting also reviewed according 'Brownfield' status to Dewan Farooq Motors (DFML) and Gandhara Nissan (GNL). The meeting was unanimous in recommending 'Brownfield' status to DFML. However, there were strong dissenting notes in the case of GNL as the applicant could not establish that its plant was not operational after the deadline specified in the policy that is July 2013.
The sources said AIDC was unanimous in raising its concern on delay in withdrawal of Regulatory Duty (RD) on industrial raw material. Malik Tahir Javaid, President LCCI, was very vocal in leading the discussion against the "unjustified" application of RD on industrial raw materials. Iftikhar, Chairman PAAPAM, said the vending industry facing closure as a result of the excessive levy as it has made the small manufacturers uncompetitive. Waheed Khan, DG PAMA, supported the demand of the vending industry and added that OEMs cost has been increased against all assurances provided by the government to keep the tariff structure as per ADP.