Business Recorder [Pakistan's First Financial Daily]
ISLAMABAD (July 14 2010): Ministry of Industries and Production (MoI&P) is all set to allow commercial import of used cars. The issue will be discussed by the Economic Co-ordination Committee (ECC) of the cabinet, in its forthcoming meeting. The meeting will be presided over by Prime Minister Syed Yousuf Raza Gilani who has already directed the MoI&P to persuade car manufacturers to reduce prices and if they do not agree to allow commercial import of used cars.
"Personally, I favour commercial import of used cars because prices of locally manufactured cars are quite high compared to international prices," said Minister for Industries and Production, Mir Hazar Khan Bijarani while talking to Business Recorder here on Tuesday. Last week, local car manufacturers met the Industries Minister at PIDC House in Karachi and gave a briefing to him. The Minister was reportedly annoyed at one of the local car manufacturers for increasing prices of different models at a time when the government is already engaged in looking at ways to bring down prices.
"When we are in the process of discussing how to reduce cars price by allowing import of used cars, local companies increased their prices," he added. As the local car manufacturers cite free market economy when they increase the prices of cars, the government is following the same principle by allowing cars' commercial import, Bijarani maintained.
In reply to a question, he said that his Ministry is discussing the age of the used cars to be imported besides constraints regarding foreign exchange. However, he clarified that a final decision has to be taken by the Economic Co-ordination Committee (ECC) of the cabinet.
The Ministry has recommended a reduction in tariff on the import of new cars, increase in age limit of used cars from 3-5 years imported under personal baggage scheme, transfer of residence and gift scheme. The age of used cars expected to be imported on commercial basis will be 3 years. When the Minister was asked whether he is being pressurised by the car manufacturers through the embassy of a foreign country, he smiled enigmatically instead of giving any clear answer.
He further stated that the ECC has considered the summary of MoI&P on "rationalisation of locally manufactured cars" in its last meeting but observed the summary has been submitted without requisite information/ details regarding the profits/ loss earned by the manufacturers which was necessary to establish a bench mark.
Sources close to Additional Secretary, Industries Ministry, Iqbal Ahmad who is also Acting Chief Executive Officer(CEO) Engineering Development Board(EAD) told this scribe that the Minister held a series of meetings with the local car manufacturers and sought proposals for reduction in the prices of cars.
The automobile manufacturers showed their reservation on decreasing the price under the present economic scenario ie sales volumes of the industry decreased to 47 per cent in 2008-09. However, the industry started to recover in 2009-10 to the extent of 36 per cent but is still below the level of its peak year ie 2006-07. Sources said car manufacturers are still using their influence to block the proposal initiated on the instructions of Prime Minister.