KARACHI: Automobile assemblers have termed the report of Competition Commission of Pakistan (CCP) titled “Competition impact assessment of automobile industry October 2014” as a carbon copy of previous report of 2013 which was based on industry position up to 2012.

“The October 2014 report cannot reflect an accurate position if it is based on more than two years old data,” said director general Pakistan Automotive Manufacturers Association (Pama) Abdul Waheed Khan in a letter to CCP’s Director Competition Policy and Research Department, Ms Kishwar Khan.

He said the recommendation of opening import of new cars is pointless as new cars are already freely importable.

Regarding feasibility of tariffs and benchmarking of policies, Pakistan represents most liberal policies towards imports at comparatively much lower tariffs, Waheed Khan said.

He said instead of taking cognisance of this illicit activity by used car dealers’ mafia and suggesting measures to curb it, the CCP proposed higher depreciation allowance and higher age limit on used cars import without realising its negative impact.

He recalled that in 2012-13, 88,399 vehicles were imported and cleared after legalisation of smuggled vehicles as against local production of 134,849 units.

More than 50,000 vehicles were cleared under amnesty scheme (which was also declared illegal by law) causing a loss of Rs35 billion. CCP’s proposal favouring used vehicles shall indeed benefit the overseas manufacturers rather than attending local competition issues, if any, he added.

He said most part of the report was devoted to building a case to liberalise import used cars about which the CCP would not have been able to gather any reliable information as activities of used cars traders are obscure to the authorities; billions of rupees transacted in the economy but all that stays out of tax net.

“CCP should have verified if any of the car OEMs indeed charging any extra amount than their publicly announced car price. Auto assemblers are not involved in controlling the prices at which cars are sold after delivery to the primary customer.

“Technically after booking, the vehicle becomes its owner’s property and he is legally allowed to dispose it of to another party for any amount of money that the two sides agree to. Therefore, on-money (premium) is a purely sub market phenomenon and there is no involvement from any OEM,” the Pama representative said.

“If the CCP is working in the best interest of Pakistani consumer, it should have recommended adjustment in the applicable taxes for lowering vehicle prices significantly. Consumers pay about 33 per cent as tax to the government on a locally assembled car,” the letter added.

The Pama DG said the CCP’s report is a seriously contested document and it should be removed from the CCP’s website.

Published in Dawn, November 23rd, 2014

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