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December 11, 2019

Auto industry optimistic about next quarter, says IMC CEO

Business

December 11, 2019

ISLAMABAD: Indus Motor Company (IMC) CEO Ali Asghar Jamali said the coming quarter seems promising despite economic slowdown in the auto sector that has resulted in almost 60 percent drop in sales.

“Last 5 months were very tough due to rupee depreciation, reduction in car financing, increase in Federal Excise Duties (FED) and higher input costs, but we are witnessing signs of improvement and, for this reason, Non Production Days (NDPs) planned in November were cancelled,” he added.

Jamali said “Make in Pakistan” approach was needed to boost the economy, and the auto sector could play a pivotal role in this regard. He expressed these view a few days back in Islamabad while talking to a selected group of media persons.

The auto industry appreciates the government's efforts to expand the tax net and documentation. But there should be a way leading to a win-win situation.

“This means there should be no harm to the industry and people should be encouraged to become filers,” he added. “More than 50 percent of sales were coming from non-filers previously, which have been impacted lately.”

The top challenges included rupee depreciation, increase in duties, and decrease in demand owing to lower purchasing power. The road to revival of the auto industry was to stick to the auto policy so the auto sector could do its best to help the national economy.

“Ad hoc decisions create unpredictability and uncertainty, which is bad for the industry and investments.” The government has shown its commitment to promoting ‘Make in Pakistan’, but instead of focusing on production of electric vehicles in the last meeting with the Engineering Development Board, the discussion focused on imports of electric vehicles, Jamali said.

The policy on electric vehicles should include import of EV and HEV specific parts only at concessionary duties so manufacturing was encouraged instead of allowing duty-free imports of EV. Government support was required to promote CKD operation and discourage CBU imports.

Commenting on the recent news allowing expats to import duty-free 3000cc hybrid cars, he said the government should incentivise them to buy locally made cars duty-free.

“We have to prefer manufacturing over trade to boost the economy, create jobs and increase exports,” he added.

The government should look into restricting the import of used cars, which were damaging the environment, local auto sector, and the national economy. It should also support and promote localisation, which would ultimately lead to employment opportunities, transfer of technology and open doors to exports.

For oversees Pakistanis, government should offer incentive on taxation and duties to promote the flow of remittances into the country.

The auto industry provided direct and indirect employment to 2.5 million labourers, and the government should safeguard the investment and localisation achieved by the auto industry in the past many decades. This would motivate existing players and new entrants to invest more. Hence, Jamali added, the current situation requires that the government and policymakers do not digress from their commitment to promote the local industry.

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