Auto industry, government differences stay unresolved
ZAHEER ABBASI
ISLAMABAD (March 14 2006): The differences between government and auto manufacturers over issues like protection and ban on import of used cars could not be resolved as both sides remained firm on their respective positions.
Sources told Business Recorder on Monday that the government did not concede to the manufacturers' demands for protection to the industry, banning import of used cars and mapping out a long-term policy based on their recommendations, and added that the government was facing pressure on the demand and supply gap.
It is learnt that the government explicitly communicated to the manufacturers that it could oppose import of foreign cars as long as demand and supply gap was not bridged. Moreover, CBR Chairman Abdullah Yusuf had challenged the figures of the manufacturers about the number of cars imported. He said that only 3,731 used cars were imported in 2005.
Auto manufacturers during an auto workshop on Wednesday held the government's policies responsible for the sector's slow growth and demanded a consistent auto policy along with amendments in existing tariff structure.
They demanded of the government to map out a long-term policy with sufficient protection to the auto industry to steer it towards global competitiveness.
Pak Suzuki Managing Director Kenichi Ayukwa said it was it difficult for the industry to achieve 500,000 units by 2010 in the absence of a policy acceptable to the manufacturers.
He said that the sector should be aligned with other 'role models' like India and Thailand and tariff should be fixed on 'Completely Built Units' (CBU). Tariff on parts should be brought down to 25 percent from the current 35 percent and it should be reduced to zero level on raw material and capital goods.
He also advocated tax exemption on investment availability of land on low rates with supply of utilities.
Saquib Ahmed Sherazi of Honda Atlas, comparing Pakistani auto sector with South African model, said that the sector had great potential but what was needed is a level playing field.
Shah M. Saad Hussain of Indus Motor stressed the need for examining the success and failure of tariff regime in other countries before switching on to the tariff system.
"A successful tariff should have two basic aims of generating revenue as well as giving strategic direction to achieve national objectives", he added.
Earlier, Secretary Ministry of Industries and Production, Kamran Rasool said the high performance in the industry bore testimony to result-oriented policies of the government. He said that the government could not afford a ban on the import of used cars in the presence of widening demand and supply gap.
The Chairman, Central Board of Revenue, Abdullah Yusaf, challenged the manufacturers' figures on the import of used cars and submitted the ones that CBR had.
He said the government was pursuing pro-active auto policy keeping in view the public opinion and needs of the industry.
Copyright Business Recorder, 2006