MUHAMMAD ALI
Although the government is wholeheartedly making efforts to bring new investments in auto sector, new entrants appear reticent to pour investments in the country due to inconsistency in the policy; it is learnt.
Talking to Business Recorder, one of the potential investors, who is keen to establish manufacturing unit of light commercial vehicles in the country, said on a condition of anonymity that auto policy 2016-21, which was announced with the aim at providing level playing field for new international and local vehicles manufacturers in Pakistan, is offering tax incentives to new entrants to compete with the existing three assemblers.
Elaborating the details about the incentives being offered by the government under new auto policy, he said that major incentive given to the new entrants was reduced 10 per cent customs duty on non-localised parts for five years against the current 32.5 per cent. For investors, the duty will be slashed by 2.5 per cent to just 30 per cent from the new fiscal year of 2016-17.
He said that new entrants can import localised parts at 25 per cent duty as compared to the current 50 per cent for five years besides having permission to import duty-free plant and machinery for setting up an assembly and manufacturing facility.
Replying to a question, he said that there was no doubt that all these incentives seemed lucrative for new entrants but inconsistency in the policy implementation is stopping investors to invest in the country.
He said that although the government had announced a clear and comprehensive new investments plan in auto policy 2016-21, the Engineering Development Board (EDB) had later amended the SRO 656(I)/2006 and restricted new entrants for manufacturing of light commercial vehicles to install 'ED Paint facility for cabins' as mandatory requirement.
On one hand, finance minister Ishaq Dar during his visit to France invited top French auto manufacturers to come into Pakistan but one the other, the authority concerned is showing capricious approach in the implementation of auto policy 2016-21, compelling new entrances to revisit their decision.
He answered that they were keen to install assembly plant for 1.5 ton commercial vehicle in Pakistan and added that they were expecting to sell not more than 400 units in first year and around 3800 units for next five year after conducting market research. "Therefore, it is unreasonable for new investors especially in the manufacturing of light commercial vehicles to invest Rs 400 million approximately only in the installation of 'ED Paint facility for cabins' despite knowing market potential".
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