Auto policy draft fails to please stakeholders

LAHORE: The draft of auto industry development policy surprised the stakeholders as it proposes a ban on production of localised cars and provides no incentives to the local industry.
“The fundamentals of a prudent auto policy do not exist in the draft, shared with us by the Engineering Development Board (EDB),” said Syed Nabeel Hashmi, ex-chairman of Pakistan Association of Auto Parts and Accessories Manufacturers (Paapam). “Targets have been fixed in the draft without providing the pathway to achieve them.”
Hashmi said the draft proposes a ban on manufacturing of more than 10-year old models. This, he added, has obviously been done to force the manufacturers to upgrade technology. However, no parameters have been fixed for the new entrants who will enjoy two-year concession on import of all auto parts or even completely built units.
“This flaw in the policy must be removed,” he said. The Paapam advised the government to provide financing benefits on the basis of the local parts used in a vehicle.
The association ex-chief said the car financing on single digit interest rate for the vehicle with the highest local content must be allowed. High localisation will reduce the cost of the car and low rate financing will encourage numerous bike riders to shift to cars, he added.
Usman Malik, another ex-chairman Paapam said the draft has rightly incorporated the quality standards for the passenger cars, which were missing in the previous policies.
Malik said local assemblers were earlier following the obsolete standards of Pakistan Standards and Quality Control Authority and EDB.
In fact, he added that a majority of the manufacturers incorporated much better standards than officially required.
Now after raising the bar the EDB has done justice with the consumers. He cautioned that compliance with new and better standards would increase the price of cars. However, he added consumers deserve stringent safety measures.
Malik regretted that the import of used cars was proposed to continue in the new auto policy. Each used car imported in the country deprives the country of 10 jobs in auto sector.
The EDB, in its preamble of the auto policy draft, has stated that auto vendors and assemblers want realistic evaluation of the dutiable prices of used cars. The board has not ensured the fair evaluation in the new draft.
Auto vendor Mansoor Abbass said the industry wants the new players to enter Pakistani market, but the new entrant policy should be realistic.
Abbass said new entrants were given huge duty incentives in return of phased localisation in the past five years. However, he regretted that not a single entrant has fulfilled the level of concession they were supposed to achieve.
In fact, he added that the EDB has provided numerous waivers to the new entrants who did not fulfill the localisation condition.
Abbass said the EDB has announced several incentives without a procedure for those who fail to localise cars according to the new entrance policy.
He warned that if this practice continues new entrants would enter the Pakistani market and import completely built cars for the two-year period of duty concessions and then close the shop.
Abbass said the proposal to pay consumers market-based interest on non-delivery of booked vehicle on schedule is a good step.
“The country has been without any auto policy for almost 30 months,” he said, hoping that a viable long-term auto industry development programme will be in place within the next few weeks.