Enough of dithering


WEB DESK: The federal government remains indecisive insofar as granting approval to the draft auto policy is concerned, indecisiveness that accounts for placing the inflow of new investment – be it from existing or new entrants – at risk. The reason is the proposal in the draft policy that seeks to provide incentives to new entrants over and above those to existing players.

It is a foregone conclusion that as and when the new entrants begin to be labelled as existing players they would no doubt be looking over their shoulder for further new entrants getting this unfair advantage subject of course to the auto policy remaining effective for a period of time whereby the new entrant today is declared an existing player.

It is patently evident that if new investors are extended better fiscal incentives than the existing players in any sector, an anomaly will be created that would benefit the new entrants. If one then throws in the genuine concerns of the Japanese government, with respect to this particular aspect of the proposed policy, given that all existing players in the auto sector are Japanese, then one can understand the considerable influence that has been brought to bear on the Finance Ministry by the Japanese not to approve this discriminatory policy clause. This influence can be measured by the fact that the Japanese government is Pakistan’s third largest creditor and extends considerable much-needed assistance (grants as well as loans) to the country.

However, there are some practices that the Japanese companies routinely engage in Pakistan which are not what they are legally mandated to follow in Western countries. For example, these car companies do not manufacture new models and neither do they take responsibility for any factory-related flaws. However, the fault for their failure to do so rests with our successive governments as they have not focused their attention on formulating appropriate policies in line with practices followed in other countries of the world.

In addition, it is also unfortunate that the auto sector in Pakistan is used by unscrupulous investors whereby they book a car from the manufacturer and resell it on the market at a profit which is commonly termed premium. Attempts to limit this practice by allowing one car per purchaser have failed and there is ample evidence to suggest that this practice continues.

While acknowledging that the auto sector represents different pressure groups and the choice is difficult yet one cannot support the government’s indecisiveness in terms of approval or rejection of the auto policy that continues to plague the sector.

There is much that requires regulation in the auto sector; however, local manufacturing contributes to gross domestic product, unlike the used car imports, as well as providing employment opportunities to not only those engaged directly in auto assembly but also in making auto parts.

Dealers of used cars are also putting pressure on the government to allow them to import three-year-old cars. Their stated objective is to encourage the manufacturers and their dealers to ensure that the cars manufactured in Pakistan can compete with these used cars in terms of price and models; however, their motive no doubt is the same: profits. This too is opposed by the existing car manufacturers for safety reasons, a concern that the used car dealers dismiss on grounds that the consumer should be allowed to decide.

Source: Business Recorder