KARACHI, July 27: The liberalization of import of used cars under the new trade policy for 2005-06 would not only hurt investment from Japanese companies but hinder industrialization as well.

Car makers have individually taken up the issue with the government and have written letters to the commerce minister urging him to reassess the policy changes which would prove disastrous for the auto industry.

“Our past efforts and future plans will go into vain and it will send negative signals to the prospective investments in the industrial sector,” Chairman and CEO of Pak Suzuki Motor Company Limited (PSMCL) Kenichi Ayukawa said in a letter to Commerce Minister Humayun Akhtar Khan on July 26.

He reminded the minister of June 17 meeting in which he had stated that there would be no further changes/relaxation to be made in used car import in the forthcoming trade policy for 2005-06. However, the new trade policy proposed a lot of changes.

He said that the unexpected policy changes were made at a time when the industry is rapidly growing, making massive investment in their capacity enhancement and technology upgradation.

He referred to the dialogues between Pakistan and Japan in March 2005 followed by the visit of Japanese prime minister in April 2005 in which the industrial growth exhibited by the industry was appreciated. He said this had prompted to infuse more support from the Japanese government and commit further investments from Japanese Automotive Industry in technology upgradation.

He was of the view that cheaper cars would land in Pakistan after increase in vehicle age from two years to three years under personal baggage and transfer of residence scheme.

“Pakistan will become a junkyard of old scrapable vehicles in the absence of non-tariff barriers in the country as the government has exempted vehicle registration in the name of applicant in personal baggage and transfer of residence,” he added.

Mr Kenichi said that he understood that the steps to liberalize imports of used cars had been taken to facilitate overseas Pakistanis but in the absence of administrative controls and proper monitoring system this would lead to misuse of the facility and serve the purpose of trading lobbies of used and second-hand car dealers.

He urged the commerce minister to take regional countries like India and Thailand as role model where the industry was highly protected.

He asked the minister to re-assess the trade policy measures as it would cause irreparable loss to the industry and put the current and future investment to high risk due to policy inconsistency.

Senior Vice-President of Honda Atlas Cars Sardar Abid has also written a letter to the commerce minister with almost same reservations as shown by Pak Suzuki chief executive.

Indus Motor Company Chairman Ali S. Habib in a letter to Humayun Akhtar Khan also painted a disastrous future outlook of the auto industry in view of trade policy measures. He urged the minister that the restriction of one year registration in the name of the person transferring residence should be re-introduced and on gift scheme cars up to two years old only should be allowed.