Senate committee has shown displeasure over briefing of Advisor to Prime Minister on automobile policy and asks the automobile companies to provide details on quality standards, prices justification and tax paid by them in accordance with their income.
In a meeting held on 27th December 2018 Senate Standing Committee on industry and production, chaired by Senator Ahmed Khan has shown its dissatisfaction over the briefing of Abdul Razzak Dawood, the advisor to Prime Minister on Commerce, Textile and Industry. A number of factors were discussed at the meeting that included the stats stating the number of vehicles sold, comprehensive details of locally produced spare parts and the ones imported, the total amount of paid taxes and the role of local automobile companies in the fulfilment of corporate social responsibility. The committee, however, directed the three automobile companies, Honda, Toyota and Suzuki to provide extensive details in the next meeting regarding a number of factors mentioned below:
1. The quality standards practically adopted by the local automobile companies in accordance with regional practice.
2. The price range of their products with appropriate justification.
3. The percentage of spare parts produced locally to those imported.
4. The export potential of the cars manufactured by the local automobile companies.
5. The total amount of tax paid by the manufacturers measured against their exact income and profits.
On this occasion, Abdul Razzak Dawood also told the committee members that the current government of Pakistan Tehreek-e-Insaf (PTI) would not be making any amendments to the automobile policy 2016-2021 as set by the previous government in its tenure that offers several incentives to the new entrants. He added that the world is a way ahead in terms of production of cars as compared to our automobile industry. But the current government is willing to increase the production capacity under the existing automobile policy in the coming years. The committee members were informed that nearly 55-70% of spare parts are produced in the local market. Moreover, 96% of tractors and 85% of motorcycles used in the country are produced by local manufacturers.
The officials of Engineering Development Board (EDB) were also present at this occasion who told the members of the committee that the auto sector of Pakistan had recorded a total investment of $1.16 billion so far. However, several negotiations are also underway with different companies that will boost up the total investment in the local auto market to a great extent.
Another official of Suzuki told during the meeting that a hefty investment of $450 million would be brought up by the company with the help of establishment of a new production plant parallel to the existing one which will strengthen the local automobile industry. Upon the briefing, Chairman of the Senate Committee Ahmed Khan directed the ministry to take essential steps for the improvement of the automobile sector. He also laid stress on the fact that the local auto manufacturers shall start making use of the new and modern technology which is already being used worldwide. He also brought into attention the need of environmental friendly industry that will be significant in reducing the adverse effects our climate has been facing over the years.
Upon the displeasure shown by the committee members over the briefing, Abdul Razzak Dawood expressed his deep concern and suggested to call the automobile companies in the next meeting. He also laid stress on visiting the manufacturing plants of the local automobile sector to bring more clarity to the picture.
The documents presented in the meeting revealed that Pak Suzuki had produced 213,280 cars/LCVs and 40,202 motorcycles in the past two years. The company paid a total tax amount of Rs.1793 million in the year 2017 and had already paid Rs.1097 million in the first three quarters of 2018. On the other hand, Indus Motor Company has produced 122,785 units in the last two years with a total tax payment of Rs.13.3 billion. The third giant auto manufacturer in Pakistan, Atlas Honda Limited has produced 90,657 cars/LCVs and a major part of motorcycle production in Pakistan with 2,110,451 units. The company has paid Rs.2.9 billion as taxes in the previous two years.
The ministry officials also responded to the public petition filed against the price hike and replied that the increase in the prices of a vehicle is entirely dependent on the devaluation of our currency against the US dollar. Currently, the car manufacturers are working with an inventory of three to four days which brings an instant impact of rupee devaluation on the prices of vehicles.
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