Age limit for used cars import: Prime Minister angry with Hafeez?

Prime Minister Yousaf Raza Gilani is reportedly furious at Finance Minister Dr Abdul Hafeez Shaikh for increasing the age limit of used cars from three to five years, to be imported under personal baggage, gift and transfer of residence schemes, sources in Industries told Business Recorder.
The decision is being termed as not only 'anti local auto industry', which is providing jobs to about 0.4 million people, but also anti revenue generating. Local assemblers, disturbed over this decision, conveyed to the government extent of Japan's investment in Pakistan (including existing auto assemblers like Toyota Indus, Suzuki and Honda) and argued that the decision could result in a rollback in investment as far as these companies are concerned. They further said that these companies had enhanced their production to meet domestic demand.
"We have heard that the Prime Minister has written a letter to the Finance Minister, copies of which have also been sent to other concerned Ministries, expressing annoyance for enhancing age limit of imported used cars by two years," sources said. Commerce Ministry, they said, is among the ministries that received the Prime Minister's letter.
Official documents obtained from the MoI&P, on December, 7, 2010, show that the ECC had directed the Commerce Ministry to notify increase in the age limit of used cars from three to five years. The MoC was also directed to modify earlier decision to include all vehicles and three-wheelers.
On December 8, 2010, Commerce Ministry issued a Statutory Regulatory Order (SRO) after a hurriedly called inter-ministerial meeting presided over by the Additional Secretary, Shahid Rahim Sheikh. This was subsequent to Finance Minister Dr Abdul Hafeez Sheikh, as Chairman Economic Co-ordination Committee (ECC) of the cabinet on December 7, 2010, expressing his reservations to the Commerce Ministry for not implementing the decision of the supreme body responsible for economic related decisions.
Unconfirmed reports also suggest that one Federal Minister was among those who pressurised the Commerce Ministry to issue the SRO immediately. A number of influential car importers have allegedly close links with federal ministers and are in favour of enhancement of used car age limit.
Sources said that the Prime Minister wants the Commerce Ministry to withdraw its SRO with immediate effect, which, according to the Rules of Business, is not possible until the ECC takes back its earlier decision. In another major development, Commerce Ministry is reported to have withdrawn its summary, titled 'Rationalising the prices of locally manufactured cars', submitted to the ECC for its forthcoming meeting.
In the summary, the MoC had recommended import of used buses, trucks, tractors, motorcycles and three wheelers. An inter-ministerial committee meeting has been convened on December 31, 2010 to consider how the SRO on enhancement of age limit from three to five years for the used cars being imported under three different schemes can be withdrawn.
Analysts argue that if the government withdraws the SRO, a number of importers may approach court and fuel frivolous litigation. The ECC, in its meeting on November 10, 2010 had constituted a committee comprising Secretary Commerce (convenor), Finance, MoI&P and Chairman FBR to discuss the issue in detail including allowing commercial import of used cars and under various schemes, proposing tariff structure and suggest workable mechanism.
The mandate of the committee was also to cover motorcycles, trucks, buses and tractors. On December 7, 2010, Industries Ministry reported to the E CC that Secretary Commerce has asked the Industries Ministry and Federal Board of Revenue (FBR) to provide additional information on the matter to devise a workable mechanism for consideration by the ECC. Local assemblers argue that they would be hurt as they had planned for above six percent growth rate and invested substantially in expansion of capacity.