KARACHI, June 22: The car assemblers in Pakistan have finally shifted their position on the automobile import and instead of demanding a blanket import ban are now asking for staggering duty reduction on car import over a period of next five year.

In a recent representation made to the government at the highest level, the Chairman of Pakistan Automotive Manufacturers Association (PAMA) Kunwar Idrees has proposed that reduction of duty on imported car should be done in stages spread over a period of five years.

The duty on used cars should be a minimum of 100 per cent (as in India) and depreciation allowance should be 12 per cent per annum and a maximum of 24 per cent, the PAMA demands.

Hardly three months ago, in March this year, the PAMA has made a strong plea with the government to continue with present policy of a total ban on import of used cars and also the high protective duties "at least for next five years".

For next five years, the PAMA now wants the government to review its 2004-05 budgetary proposals, which has reduced the duty on 1300 cc cars to 50 per cent from 100 per cent. The CKD duty is 35 per cent and thus only 15 per cent protection is available.

Pakistan's duty on car imports will now be lower than that of India and Thailand, the PAMA points out in its representation where it states that import levy exclusive of sales tax is over 100 per cent and duty on CKD is 20 per cent or 30 per cent. The PAMA contends that automobile production in India and Thailand are six to seven times that of Pakistan's current volume.

It has pointed out that both India and Thailand have imposed special restrictions on import of both new and used cars to further protect their local industry. The PAMA has sounded an alarm bell and declared that import of new cars from Korea and other countries at the proposed reduced duty rates as well as used cars at rates further reduced "will lead to a drastic reduction in the utilization of even the current installed capacity and not to speak of future investments by OEMs and vendors.

A schedule of car assemblers future investment and production plan reveals that Pakistan's automobile sector is poised to raise its investment from Rs52 billion at present to Rs93 billion and push up production from 112,000 units in 2004- 05 to 197,000 by 08-09.

The PAMA claims that automobile sector with assemblers and vendors now employ 116,500 persons which if allowed to grow unhampered would employ 190,000 persons. The PAMA has given a chart to show comparative tariff structure for import of used and new cars in India and Thailand to illustrate its point that car import regime in Pakistan is now most liberal.