News Analysis |
An assemblage of auto stakeholders, manufacturers, government authorities and consumers raised concerns against the age-old illegal practice of charging premiums for booking cars by auto dealers. Also, the government of Pakistan has approved eight applications of new entrants who want to set up vehicle assembly plants in Pakistan including passenger vehicles and HTV’s.
A representative of the Engineering Development Board (EDB), during an open hearing on the Automobile Sector in Pakistan organized by The Competition Commission of Pakistan (CCP) on 12th April, 2018, informed the press that eight applications of new entrants were approved to set up vehicle assembly plants in Pakistan including the passenger vehicles.
The official of Ministry of Commerce said that they were soliciting proposals from various stakeholders on the forthcoming budget including those in the automobile sector and asked the attendees to send their proposals to the Ministry.
The EDB rep said that this move would result in considerable foreign direct investment in the country creating more jobs. The EDB is committed to providing all out support to strengthen the engineering base in Pakistan by creating a level playing field for all manufacturers, he said.
The CCP’s bench, comprising the Chairperson Vadiyya Khalil, and Members Dr. Shehzad Ansar and Dr. Muhammad Saleem, conducted the open hearing that was attended by the representatives of Federal Board of Revenue, Ministry of Commerce, Engineering Development Board (EDB), Excise and Taxation, representatives of auto manufacturers including Indus Motor Company Limited, Pak Suzuki, Pakistan Automobiles Manufacturers Association (PAMA), Pakistan Automobile Assemblers Dealers Association (PAMADA), Pakistan Association Of Automotive Parts & Accessories Manufacturers (PAAPAM), online platforms including Pakwheels, car importers, and consumers in a large number.
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In her opening speech, Chairperson Khalil said that the automobile sector plays a crucial role in generating an economic activity in the country, providing employment to a large number of people, and contributing to the national kitty through paying taxes and other relevant duties and charges. However, she said the CCP continues to receive concerns and complaints regarding the pricing of locally made cars, safety features, technological issues, delivery of vehicles, payment of premiums, and progress on localization of auto industry and deletion programmes. The open hearing, she said, has been organised to discuss those issues and other relevant problems so that CCP can take necessary measures under its mandate to help resolve things.
The consumers in the audience complained of long delays in the delivery of vehicles after bookings, premiums charged by dealers, increasing prices of cars, deteriorating quality of vehicles and lack of safety features in the locally made cars. The CEO of Indus Motor Company Ali Asghar Jamali gave a detailed presentation giving his perspective on the pertinent issues, including the company’s recent efforts to cancel orders whose authenticity could not be verified.
The open hearing, she said, has been organised to discuss those issues and other relevant problems so that CCP can take necessary measures under its mandate to help resolve things.
He said that his company had recently invested in increasing its manufacturing capacity to cope with the increasing demand. Mr. Jamali said that the issue of premium was equally disturbing for his company and they would support all initiatives to curb the practice. Indus Motors has, in the first quarter of the fiscal year, has increased the prices of its vehicles twice under the pretext of Rupee-Dollar imbalance.
In another thought-provoking suggestion, the contingent representing used car importers suggested allowing the import of new cars on the commercial basis, in contrast to the current practice of ‘under transfer of’ residence and gift schemes, so that people have more options of choosing cars and the existing monopoly could break.
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Also, the official of the Federal Board of Revenue (FBR) said that matters relating to import duties on vehicles have been decided by the Ministry of Commerce and not the FBR. The official of Excise and Taxation Islamabad said that his department will support any policy measure to curb the practice of charging premiums by dealers.
The official of Ministry of Commerce said that they were soliciting proposals from various stakeholders on the forthcoming budget including those in the automobile sector and asked the attendees to send their proposals to the Ministry.