The Pakistani government has hiked import car levies by up to 500%. To protect the domestic auto industry from international competition, the measure has been taken.
At a Public Accounts Committee meeting, the Additional Secretary of Commerce announced the idea (PAC). Noor Alarm Khan, a committee member and MNA, urged cutting back on the excessive protection that aids local automakers in defrauding customers.
Protectionism in government economic policies limits international commerce to support home businesses that are struggling due to low-cost imports. Although the policies’ main objective is to boost economic activity, they can also be used to address issues with safety or quality.
Khan claimed in a meeting that after the committee’s most recent meeting, auto manufacturers raised prices even further. However, these are not car manufacturers, but rather car assemblers.
Khan urged that the term “manufacturers” be dropped by the government in favour of the term “assemblers”.
Saleem Mandiwala, a PAC member, claimed that even if we drop the tariff on the entry of used cars and lower the duty protection from 500% to 400%, they will still be able to turn a profit.
Later, the PAC chairman says that there is no need to add any additional fees on top of an increase in automobile costs if the customer is paying 100% in advance. He further stated that by delivering the engine in three sections, automakers would just have to pay 10% duty as opposed to 35%. Do CKD kits really come in three portions to save on taxes? Officials from FBR responded that the Engineering Development Board, not FBR, makes the decision (EDB).
Local assemblers, however, benefit from 241% to 500% protection. Prior to this, the protection level ranged from 100% to 390%. The announcement was made by Special Secretary of Commerce Memon Mujataba.
The Ministry of Commerce and Industries was given a directive by the PAC to evaluate the protection policy. And within a month, create a policy addressing the problem. Vehicles will be delivered to customers who pay in full up front within a month.
The companies would deliver the cars within 60 days of booking, the secretary informed the committee. A corporation will incur a 3% KIBOR tax if it fails to comply. Noor Alam Khan, the chairwoman of the PAC, stated that if somebody is making a complete payment in advance. Why then do the automakers demand an additional Rs. 400,000 from the customers? “Under what legality are they requesting money from the public?
According to the industry secretary, an advance payment of about Rs 217.6 billion is owed to automakers. Manufacturers are operating at a reduced capacity as a result of the poor demand. Therefore, the government recommends automobile manufacturers to limit bookings to three months in advance.
