Pakistan rolls out 5-year Auto Policy

The government of Pakistan formally launched the five-year Auto Policy in Islamabad on Monday.

The policy aims at putting an end to the monopoly of local auto industry leaders and facilitating the new entrants, besides creating 1.6 million new jobs in the country.

Prime Minister Nawaz Sharif had approved Sunday the long-awaited Strategic Trade Policy Framework (STPF), thereby forming a trade committee under Commerce Minister Khurram Dastgir to suggest ways to remove barriers in the way of exports.

Pakistani market has long been dominated by Japanese carmakers Suzuki, Toyota, and Honda which have enjoyed an absolute monopoly and often accused of collectively putting a heftier price tag on relatively lower-quality products.

Addressing a press conference in Islamabad on Monday, Federal Minister for Defence Khawaja Muhammad Asif said that the new auto policy has been introduced with an aim to address the needs of consumers and the overall auto market.

The newly-launched five-year Auto Policy allows foreign carmakers to import machinery for their plants without having to pay any duty, which is nothing less than an open invitation to the foreign car manufacturers. The duty-free machinery import is set to result in increased competition and reduced prices of cars in the local market.

Moreover, the Islamabad-incumbent government also fixed the import duty on new car parts which can't be produced locally at 10 percent for five years as against the prevailing 32.5 percent import duty. The import duty on such parts would be set at 25 percent for the existing carmakers.

The Defence Minister further elaborated that the existing international car makers in Pakistani market failed to launch the cars that could match the basic features available to international consumers, such as airbags, anti-lock braking, and emission control systems.

"There is no value for money a Pakistani car buyer gets, even after paying 2.6 million rupees (26,000 U.S. dollars) for an 1,800cc car," he added.

He went on to say that the world was enjoying the Euro-6 cars but Pakistanis were restricted to use Euro-2 cars, and the new Auto Policy would safeguard the interest of Pakistani auto consumers.

Under the five-year Auto Policy, the onus has also been put on reviving the ailing auto plants. The ailing auto plants would be given a three-year period to revive their production to augment total production from current 152,000 units to 350,000 units.

Chairman Pakistan Board of Investment (BoI) Miftah Ismail said on the occasion that the Auto Policy 2016-20 was likely to lure two or three new carmakers into Pakistani market.

The appetite for new cars is constantly on the rise in Pakistan as the country's economy is performing at an eight-year peak due to relieve in inflation which resulted in increased consumer spending in the last few years.

Amid bolstered investors' confidence, the government is trying to increase the size of the local auto market by luring the well-renowned German auto manufacturers including Volkswagen, which would not only put an end to the monopoly of the three top Japanese carmakers but would also present the world's finest vehicles at cheaper rates in the country. Enditem