May 12, 2006	Friday	Rabi-us-Sani 13, 1427

KARACHI, May 11: Four major car assemblers of the country have expressed serious reservations on the government policy to allow new entrants to the auto assembling field for importing A-Max parts at completely knock down (CKD) rates.

“The government can consider allocation of land at concessionary rate, increased capital allowance or tax-holiday benefit to the new entrants to auto assembling,” a joint memorandum of the four assemblers given to the government emphatically stated. The memorandum expresses strong disapproval to the proposal as it creates double standard between the present assemblers and new entrants.

The assemblers met the federal industries and production minister on March 24 followed by another meeting with the deputy chairman of the Planning Commission on May 3 to put forward their point of view substantiated with documents and business plans.

What is shocking for the assemblers is the statement of Central Board of Revenue Chairman Abdullah Yousuf who pointed out that under the proposed auto policy, the duty rate on import of A-Max parts would be reduced from 50 per cent to 35 per cent in three years. This is contrary to the recommendations from the industry to the Engineering Development Board to maintain the duty rate at 50 per cent till 2010-11.

Industry sources say that their Japanese partners view the proposed policy as a threat to their expansion plans and they may decide to opt out if the government goes ahead with it.

The auto assemblers’ contention is that they have increased their production capacity from 50,000 units a year to 200,000 units a year and are now well poised to take it up to half a million units in a year.

The government has before it a model of South African Motor Industry Development Programme on lines of which the new auto policy has been drawn up.

The assemblers say that ground realities in Pakistan are different from those of South Africa and its policy cannot be adopted.

“Any hasty decision will not only jeopardise the investments made or those in the pipeline, but will also cripple the industry to the detriment of growth of large-scale manufacturing in the country,” the memorandum warned.