Auto makers wish list

For those involved in the car assembling and manufacturing business, life isn as tranquil as they had visualised at the time of entering the automotive industry.
Although, the presence of car assemblers dates back to nearly two decades in Pakistan, ironically, the industrys current status suggests that local assemblers are still far away from growth stage.
The rising cost of imports and manufacturing has already taken its toll on the industry. Now the relaxation of import policy for used cars appears to be coming to life of assemblers worst nightmare. So the local assemblers have now become more rigorous and vocal in highlighting their woes and concerns to policy markers, as evident from the auto industrys budget proposals being presented to the government officials lately.
A look at the document suggests that the other most important issue that is still haunting manufacturers is the clause under the Auto Industry Development Plan that has prescribed manufacturers to localise certain high-tech parts used in vehicle manufacturing within the ongoing fiscal year. The assemblers are liable to pay much higher customs duties on the import of such parts in the future, if they fail to localise them soon.
But the auto sector has an axe to grind, on grounds that the local production of high-tech parts requires high capital investment, technological collaboration and volume of scales. So they are calling on the government for a relaxation in this compulsion.The automakers have also expressed disapproval over the clearance of used parts by paying penalty, on a per kg basis, under SRO 487(I) 2007. Therefore, to completely halt the import of used parts, the manufacturers demanded of the government to address loopholes in the current system.
Besides, the document also shared industry woes regarding removal of the negative list from Afghanistan Transit Trade Agreement since this would result in smuggling of auto parts and RHD vehicles into Pakistan en route to Afghanistan.
To boost commercial vehicle sales, the wish list also emphasized the availability of financing facility for commercial vehicles.
Instead of having auto dealers operate as agents between assemblers and buyers, the document also calls for bringing their network under the wholesale/ retail mode by reducing turnover and withholding tax. Under the proposed mechanism, dealers will hold car inventories, which would lead to a reduction in delivery delays and abolish the "own" money system.
Moreover, existing manufacturers also widely criticised new entrant policy, which will allow new investors to import CKD units at very low duty rates during the first few years of the project. Therefore, they demanded the government to allow one-time investment incentives rather than a favourable import duty structure, which will distort level-playing field within the industry.