ZAHEER ABBASI
ISLAMABAD (January 26 2007): The auto industry is neither against the import of used cars nor demands any tariff protection in the new policy, said a director of the Indus Motor Company Limited here on Thursday. Briefing the media persons on automotive industry, Indus Motors Director (corporate planning) Shah M. Saad Hussain said.
"We are not threatened by the import of used cars, nor seeking any tariff protection. We can also import used cars if the government policy continued." Giving an overview of the industry, he said it had shown an average growth of about 25 percent over the last three years in Pakistan whereas the Toyota is about to surpass its global competitor, the General Motors, in the international market.
He hoped that the growth rate is expected to be between 10 and 15 percent in 2006-07 as the manufacturers have increased their production capacity manifold. He, however, denied that the local carmakers were not producing to their full capacity and deliberately creating demand-supply gap to raise prices of the vehicles.
Contrary to his stance, the industry has forced the government to revise upward tariff in the proposed new auto policy for protection besides, formation of a committee to recommend steps for curtailing import of used cars.
The proposed annual tariff reduction in the new policy has been staggered for three and two years, respectively, with significant upward revision. The 15 and 10 percent reduction proposed by the EDB has now been revised to five percent only.
The new tariff will be 50 percent for initial period of three years on localised parts instead of two years, which will then be reduced to 47.5 percent for next two years followed by 45 percent for onward period rather than 15 percent reduction proposed by the industry in five years.
Similarly, the tariff on non-localised parts of cars in CKD condition will be 35 percent in the first two years instead of one-year and then 32.5 percent for the next two years followed by 30 percent rather than the reduction to 30, 27 and 25 percent in five years period.
On the issue of used cars, the industry has also demanded that the import of 5-year-old cars be allowed only under transfer of residence scheme, depreciation allowance be reduced to 1 percent per year besides limiting total depreciation to 25 percent.
Copyright Business Recorder, 2007