Pakistan Automotive policy: new players blocked!

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Pakistan Automotive policy

A European car manufacturer shall be brought out about the government n the auto market in order to break the monopoly enjoyed by existing car manufacturers. Bureaucrats have again blocked foreign player referenced incentives.
By not getting any referred help no new manufacturer shall be interested to spend their dollars to get up front with their Audi’s of Volkswagens. Hence, by the coalition of three existing assemblies government officials have managed to introduce in Pakistan a new auto brand.

A revised auto policy for approval of the Economic Corridor Committee (ECC) was out forward on Monday by the Ministry of Industries and Production that contained almost the same tax incentives that the new ones were being offered with.

The summary approval though was stopped by Khawaja Asif, Water and Power Minister who implied that the policy be deferred due to the absence of the Chairman Board of Investment, Miftah Ismail.

Asif and Ismail were the drafted policy’s members but the Ministry of Industry’s policy was different than made earlier, hence Asif deferred the approval.

Ishaq Dar who is ECC’s Chairman Finance Minister remained in conformity with Asif to defer the same. He said that the policy needed further more discussion at the inter-ministerial level. This was then the second time that the decision was delayed.

The new automobile policy making committee was finalized in October 2014 which had proposed the policy having great benefits for the existing manufacturers. It was in Aug 2015 when the ECC policy was deferred and Khawaja Asif’s committee was back at the drawing board again.

During the discussion the Category C was dropped which stated that the same benefits be applied to new players as well. Furthermore, implying that Category A calls for revising the incentives given to the new manufacturers and implementation of the keyword “new brand” indicate that it is without any benefits.

But Khawaja Asif’s committee met with utter disappointment when the Ministry of Industry gave the same incentives to the new ones as well. Hence, Greenfield investments were redefined as the construction of new and independent automotive assembly with manufacturing facilities facilitated by the investor for vehicle production and not for those already manufactured.

Hence, the assembly of Toyota Camry is a new investment and the “new brand” keyword is excluded for the same. The word new was also eliminated from the policy by the Ministry of Industries so that the same benefits are offered to all. However, delay in the approval of this policy is already benefitting the existing manufacturers.

Hence, the Chairman BoI Miftah Ismail says that they will make sure that the policy is enforced within this month only since it would support Pakistan’s new auto brands.

On the other hand, this policy is just a nuisance for the existing investors while Volkswagen which is Germany’s biggest and the World’s second largest auto manufacturer is very eager to do business in Pakistan with tough competition prevailing around.

The existing player incentives have also been opposed by the FBR saying that these investors have already benefited their share since over twenty years and hence it is now of no further interest for the country. The FBR has furthermore also questioned the existing manufacturers of the technological advancements that they should be involved in.

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