Pakistan Government Doesn’t Know How Much Profit Local Car Assemblers Make
On Thursday, Ghulam Murtaza Khan Jatoi, the Minister for Industries and Production, told the National Assembly in a written reply that the existing automobile manufacturers in Pakistan do not share the profits they make on sold vehicles and that the government is not aware of the profit figures. He was quoted saying,
“All car manufacturing companies are in the private sector, and as such they do not share the data concerning the cost of goods sold,”
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He also wrote that the government and automakers have no arrangement regarding using imported or locally assembled parts, or launching vehicles with international safety standards or quality control. He further said,
“From 1987 to 2003, the Government of Pakistan followed deletion policy, a local content scheme, which was phased out in 2004 and replaced with the Tariff Based System (TBS) to make the auto sector compliant with Trade Related Investment Measures (TRIMs) under the WTO regime,”
“At present EDB issues manufacturing licenses/certificates to vehicle assemblers after verifying their manufacturing facilities. Despite request by the EDB, car manufacturers have yet to share their standards,”
The Minister admitted that the government, for now at least, has no control over the manufacturing standards and that all the automakers are following their own standards.
From a buyer’s point of view, this explains a lot of things as far the quality of locally produced cars is concerned. It feels like the local car assemblers are not legally bound to give you what you actually should have. If you have been sold a lemon, you can, however, contact a consumer court. But overall, there is not government-wide control.
Also, the fact that the profits companies like Suzuki or Toyota make on Mehran or Corolla XLi respectively is not in government’s knowledge is quite mindboggling. Even the most basic Mehran can cost you PKR 630,000 nowadays.
The companies are publicly listed on the stock exchanges.
They publish audited financial statements every year.
They pay tax to various government entities. As such they have to share their revenue and profit, since some taxes are levied on revenue and some are levied on net profit.
However, the quoted sentence talks about the COGS, which is a distinct financial number not identical to profit.
Auto manufacturers are subject to some regulations, such as meeting the Euro-II emissions standard.
Some regulations shape the selection and offerings, such as the tax on engines and price of fuel indirectly effect the choice of engines manufacturers choose to fit.
Another type of regulations are trade regulations. Seemingly good engines/technology of Indian origin cannot be had because of trade embargo.
The minister himself is admitting that auto industry is not being monitored and they have no data about the huge amount they ate making from consumers. They are overcharging the people as the same vehicles with better specifications are sold in almost half the price in India and other neighbouring countries. They need to improve the quality and drop the prices. These money making machines are looting the public without giving due share to government.
99% of raw material in india is local, i.e. they do not need to import it, 35% of raw material in pakistan is local, the rest has to be import. plus india has a large scale economy as compared to pakistan, the rupee fluctuation is another story, government kickbacks another, and last but not least the corrupt government and bureaucracy. that is why the most basic mehran cost you 630,000
Everyone tries to save his neck.
How good it was to see along with this statement, Federal Minister should have resigned admitting it to be the fault of his ministry.
bhai kiitne paise milay is minister ko yeh kahne kay? do char din mei agar kuch milgaya to yeh bhi chup ho jaie ga..
you cant compare india with pakistan. their auto policy was miles ahead even in the beginning . They gave cheap land to many auto manufacturers plus they place 200% tax on all imported cars and nearly high on imported parts. Meanwhile Pakistan has quite high tax on new cars. no safety laws, no consumer protection laws….
do these IMBECILES know ANYTHING ?
if they cared about the so-called land of ‘Pure’ , we;d be LIGHT YEARS ahead of the dismal state that the country’s embroiled in currently !