KARACHI, June 11: Car vendor industry and assemblers have sought meetings with the prime minister and the industries and production minister to get two budgetary decisions reversed. They say the decision to raise depreciation allowance on used car imports to two from one per cent and duty free import of tractors will affect the industry production.

“We are seeking meetings with the prime minister and the industries and production minister next week in order to save Rs90 billion investment made till June 2005 by the vendors and car makers, besides creating employment for 170,000 persons,” Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) Chairman Mehdi Ali Rizvi told Dawn on Saturday.

When asked if the PM and the minister do not respond positively to the Paapam demand, he said that it was premature to comment on this stage, but the association would definitely decide the future course of action in case it failed to persuades the government to accommodate the industry’s demand.

However, he said the Paapam members would be bound to shelve ongoing and future investment plans if the government did not listen to genuine grievances of the main engineering industry.

“What is the benefit of investing heavily when cheap used cars flood the market after the budgetary decision,” he said, adding that “we have actually planned to invest up to Rs200 billion by the year 2010 and create employments for two million people,” Mr Rizvi said.

He said the association members were optimistic that the government would realize the difficult situation of the industry and reverse the decision of allowing two per cent depreciation allowance on used cars import.

Pakistan Automotive Manufacturers Association (Pama) Chairman Kunwar Idris told Dawn that it was likely that both Pama and Paapam would jointly present their point of view before the government. “In the long and medium term, the import of used cars will jeopardize the bright prospects of both vendors and manufacturers as sales of locally assembled cars will drop which means a significant decline in the production.

Earlier, speaking at a press conference here, Mr Idris said the industry was expected to produce 144,000 cars and light commercial vehicles (LCVs) in the current year, followed by 500,000 motorcycles, 46,000 tractors and 2,500 trucks and buses. For 2005-06, the industry is geared up to produce 170,000 cars and LCVs and 60,000 tractors, he adds.

He said the effective rate of duty on the import of cars now had been reduced to 25pc on two-year-old cars. The import duty on 800cc car has been reduced to Rs120,000, and by adding the cost of vehicle of Rs150,000, the landed cost would be Rs270,000, he added.

India produces 10 times more than Pakistan’s volumes and it has virtually banned the import of used cars. The rate of duty on import of new car is 105pc plus other taxes as compared to 50pc in Pakistan.

He also showed his concern over some other issues. He said the duty on import of secondary steel has been left at 25pc. “It should be reduced to 10pc.” Besides, he added the industry did not accept the regime of sales tax adjustment under SRO531 dated June 6, 2005. “It is better to impose 10pc sales tax on all tractors and 15pc sales tax on all components locally produced by the vendors.