LAHORE, April 17: The Pakistan Association of Automotive Parts and Accessories Manufacturers has rejected the relaxation and preferential duty treatment being considered for the new entrants to the car manufacturing sector and cautioned the government against implementing the plan arbitrarily.

Describing the concessions considered by the Economic Coordination Committee in its meeting as “death warrant” for the automobile industry, association chairman Razzaq Ahmed, vice-chairman Shariq Sohail and executive committee members at a press conference here on Monday said that the existing investment of hundreds of billions of rupees in the automobile sector would be destroyed in case the same were given.

They said the concessions being considered for the new entrants had neither been circulated nor discussed with the existing stakeholders in accordance with the practice of the present government for the past seven years. The existing policy clearly laid down the procedure for the new entrants and provided adequate time to them to attain the components localisation level achieved by the existing industrial units.

They said the grant of permission to new investors coming with one billion rupees investment to import completely built automobiles against payment of 35 per cent customs duty would not only harm the interests of the existing manufacturers with investments of hundreds of billions of rupees, but would also deprive the vendor industry of new production orders.

They pointed out that the government and the industry had deliberated for years and agreed upon a comprehensive WTO compliant tariff based system for implementation from July 2006.

The system fully covered all aspects of the industry with reference to the existing assemblers as well as the new entrants.

They said the automobile industry had raised its production level from 50,000 units in 1999 to 200,000 units this year through heavy investment as a result of consistent economic policies of the government for the past seven years. Any of its arbitrary decision aimed at favouring selected new entrants would have a detrimental effect on the vendor industry which employed 200,000 persons and combined with OEMs was one of the top contributors to the government revenue.

They pointed out that the industry was already facing a negative impact due to an expected import of over 30,000 used cars (15 per cent of market size). Implementation of the concessions considered by the ECC would be tantamount to putting salt on its wounds.