Since Pakistan is facing the drought of investment in almost all sectors, mostly due to unstable policies, the government should support the local auto industry that will contribute about 5.5 per cent in the national GDP by 2022. Talking to media person here at a local hotel on Thursday Indus Motor Company (IMC) Chief Executive Parvez Ghias said that with the help of government the local auto industry can fetch the investment up to Rs250 billion by 2022, along with the exports of $1 billion. “It will also double the direct employment of the industry from current 192,000 to 400,000,” he underlined.
But, he adds, there is a dire need of stable policies, especially a 10-year Auto Industry Development Program (AIDP) because the current AIDP is expiring by the end of June. He said the 5-year AIDP-II plan proposed by the Engineering Development Board (EDB) for the year 2013-17 is not too far from what the industry has suggested.
“There should be gradual decrease in import duties: 30 per cent in the first two years, 27.5 per cent in the third and fourth years and 25 per cent in the fifth year, for it will not only encourage investment but also to safeguard the interests of local vendors,” said IMC CEO. The import duty reduction and tariff rates for localised and non-localised CKD kits are the actual reasons of the current conflict of interests between the EDB and local auto industry. EDB suggests reducing the duty on non-localised CKD kits from current 32.5 per cent to 20 per cent over the next five years. Parvez further said that in order to increase the annual output of the local auto industry from the current 160,000 units to 500,000 units by 2022, there should be a complete ban on the import of used cars because they are hurting the industry more than imagined. The import of used cars is likely to exceed the number of 43 thousand units this fiscal, which is the 25 per cent of total industry volume.
“To safeguard the current investment (Rs92 billion) and employment (192,000) in local auto industry, the imports of used cars should be discouraged, like other Asian countries,” he said, adding that relaxation in policy should be reversed back to three years and one per cent allowable depreciation, with maximum cap at 36 per cent.
As per the current trends of the industry, volume of the auto market in the next fiscal year is expected to remain almost equal to the current level with projected sales of 220,000 vehicles, including 160,000 locally assembled units. Earlier, Pakistan Automotive Manufacturers’ Association (PAMA) and Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) held a meeting with EDB on May 7 to table their suggestions in response to the board’s proposals that 40 per cent tariff should be imposed on CBUs of up to 1,000cc. But, the tariffs on different ranges of cars the auto industry proposed are: 50 per cent for the cars up to 800cc (should be retained till 2017); 55 per cent for the cars from 801cc to 1,000cc; 60 per cent on the cars of 1,001cc to 1,500cc; 70 per cent for the cars of 1501cc to 2,000cc; and 90 per cent on the cars of above 2,000cc power. Parvez Ghias further said that the government should be clear in its aims and objectives and must decide whether they want to make Pakistan a trade-based country or a country with heavy manufacturing industry.
