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For many weeks, industry leaders have been huddling with policy makers in government to try and chalk out an increasingly elusive ‘win-win’ situation as the basis of a new Automobile Industry Development Programme (AIDP). The process has been tedious, with the government swayed by the powerful lobbying of car importers. No policy has come forth as yet and uncertainty is rife.
There are rifts within the industry as well. The Pakistan Association Of Automotive Parts And Assemblers (PAAPAM) is against liberalising trade with India, given that greater imports of cheaper parts from India is more likely to occur, rather than of built-up cars, thereby eating into profits of local parts makers. The case for free trade with India is led by the current market leader Pak Suzuki which seeks to benefit directly by importing parts from an equally large Maruti-Suzuki in India. PAAPAM fears this will put its 400,000 workers and a multi-million rupee industry into irreversible peril.
Taxation at various levels of production and sales is another issue which has been causing the price of vehicles to go up. Pakistan is one of only 40 countries designated as an automobile producer. Yet it has a ratio of only 13 vehicles per 1,000 people – and this can increase with affordability, a key element that the liberal import of three year-old cars does not appear to have addressed. The government has promised to lend a sympathetic ear in this and there are hopes that a solution will surface in FY 2014-15.
At present a critical local manufacturing base still awaits resolution of these issues as industry players are unable to plan for the long-term in the face of question marks over policy. No one disagrees that the bigger question is whether the government will finally take a strong position to deflect vested lobbying from both sides of the divide, to announce and enable an AIDP that seeks to drive the economy, or not.
– Mazhar M Chinoy
First published in the Health Advertiser Section of The DAWN National Weekend Advertiser on March 23, 2014.