KARACHI, July 22: Vendors of car manufacturing companies are now seriously considering reviewing their future investment plans.

They see the amendment in import regime for used car imports, announced on Thursday by the commerce minister, Humayun Akhtar Khan, as the last nail in the coffin, plunging the vending base of the engineering industry in hot waters.

A number of big and small vendors have taken a huge expansion programme in the last two to three years for their projects and some of them have to procure additional lands for setting up a separate parts manufacturing unit while other have managed to go for a vertical expansion of their projects.

The chairman, Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM), Mehdi Ali Rizvi said that he was actively considering to suspend construction on his new factory being set up at a cost of Rs100 million for parts making. He said he had two factories on which Rs300 million had already been invested.

“We have been planning for 10 years but the way the government is coming out with new decisions, it is highly disturbing for all the vending industry,” he said. “I can see a threat looming on my new project of Rs100 million,” Mehdi said.

“Former chairman, PAAPAM, Jawaid Shaikh told Dawn on Friday that he is seriously considering winding up his $5.5 million joint venture project with a Korean company for setting up a forging unit, a downstream industry for parts making.

“I have discussed the anti industry measures taken in the new Trade Policy with my Korean Principal and I will hold a meeting with the Korean investors shortly asking them not to invest in Pakistan,” he said. Korean company has 50 per cent equity in the project, which was set to be launched in September this year. The construction work had been going on. The agreement was signed with the Korean counterpart in January this year.

He said the association high ups were seriously considering issuing a notice to their members, asking them to invest in their on-going and future projects on their own risk instead of relying on the government.

“The government is actually planning to make Pakistan a trading estate now,” he said adding that it seems that the government does want industrialization in the country.

Besides the Korean project, he said he was also seriously thinking of putting on hold their investment on his on-going projects.

Former chairman PAAPAM, Mohammad Ashraf Shaikh said that he had expanded his business and the construction work had been going on his three new factories at Bin Qasim.

“I am thinking suspending investment in three new factories till the government comes out with an investment and industry-friendly policies,” he said.

He said he had already invested Rs300 million in its two factories while another Rs210 million would be invested in three new factories of parts making and procurement of plant and machinery.

“Prime Minister and President should now give a clear cut statement whether they really want industrialization or they want to see Pakistan to emerge as a trading company,” Ashraf said.

He said some well established PAAPAM members were also confused over the Thursday’s decision whether to go ahead with their plans or put on hold their on going and future investment plans.

He said that actually vendors have planned to invest up to Rs200 billion by the year 2010, which would create two million jobs. The current investment of the vending industry alone stands at Rs90 billion and the industry provides jobs to over 170,000 people.

“We might sustain the budgetary decision for increasing rate of depreciation for import of used cars at two per cent from one per cent but the Trade Policy decision is really hard to swallow,” he said.

When Vending industry found that local car industry was running double shift to meet the demand and supply gap of over 40,000 cars it geared up its efforts to expand its business. The expansion in demand was caused by the attractive leasing and car financing schemes and heavy arrival of home remittances from abroad that fuelled buying euphoria among consumers to own a new car at any cost.

In 2005-2006 Trade Policy, the government had allowed import of used car up to three years under gift and personnel baggage schemes. The government had also allowed import of used vehicles up to three years as compared to two years previously. The restriction of sending cars from only blood relations had also been done away with.