Pak state actively promotes cartels and monopolies like sugar, cement, banking, private power, real estate, auto-industry, stock exchange ? to facilitate further concentration of wealth. Pak could have easily become a exporting hub of auto industry and its automotive industry could have successfully produce International standard and brands of cars just like recent development in motorcycles. However there are active trade and policy barriers in favor of various Japanese brands.
To estimate the potential and lost opportunity of Auto Industry, existing volume of the industry will give some glimpse. Currently there are 3200 units of automotive industry with investment of Rs. 92 Billion, Employing 1.8 Million people and producing annually 1.8 Million motorcycle and 200,000 vehicles. The Autopart Industry generating export of Rs. 128 Million with great potential to further enhance.
It is evident that Pakistan possesses a huge potential to become a manufacturing and exporting hub of auto industry for renowned Original Equipment Manufacturers (OEMs) of the world. However due to blind support of Japanese automobile companies and major policy barrier, the autoparts vendors could not attained excellence at par with global standard. The policy barriers does not gave space or room for further development for vendors to scale up their production with cutting edge technology and emerging trends in international automobile market.
Pak has regressive taxes and major policy barrier which encourages resources drain and favor MNCs, where the burden of taxes increases and opportunities for improvement diminishes as one?s income decreases and most importantly discourage local economy based innovation /entrepreneurship. Therefore masses bear the full brunt of indirect taxation. In simple words, Pak auto policy and overall taxation is theft rationalized for foreign and few connected families.
In Shubba Bazar Peshawar, complete vehicle can be assembled just like any Toyota, Honda or Suzuki local plant. However Tax authorities and Excise Deptt does not issue registration to any such vehicle. If registration is allowed, with a local brand. It will be major blow to various Japanese brands like Toyota, Honda, Suzuki. It is important to note Toyota, Honda and Suzuki does a similar process of just assembling the vehicles however of very low and inferior quality.
Basically Japanese auto brands pay kick back worth in billions to various higher ups responsible for Auto Policy and create active barriers for emergence of any local brand of Automobiles. In this regard, recent development in Motor Cycles local Manufacturing is an good example which has knocked down Honda and Yamaha market monopoly, sales and profit margins. Interestingly during last 10 years Motor Cycle prices has remained at same level in spite of spiraling inflations at almost 2000 % during a decade. Existing Pak auto horrible policy can be explained by a simple example. Imagine 400-500 years, if state/king allowed only few families to breed horses/oxen (means of transportation then) in name of quality, tax collection or job creation.