ECC ap­proves five-year auto pol­icy, Rs5bn guar­an­tee to PIA

The Pak Banker - - COMPANIES/BOSS -

The Eco­nomic Co­or­di­na­tion Com­mit­tee (ECC) of the Cab­i­net ap­proved Au­to­mo­tive De­vel­op­ment Pol­icy 2016-21 that of­fers in­cen­tives to new man­u­fac­tur­ers through lower tax rates to bring ve­hi­cle prices down through com­pe­ti­tion with ex­ist­ing play­ers.

The meet­ing, presided over by Fi­nance Min­is­ter Ishaq Dar, also in­creased sov­er­eign guar­an­tees to Pak­istan In­ter­na­tional Air­lines (PIA) by Rs5 bil­lion, im­posed reg­u­la­tory du­ties on steel and iron prod­ucts and ex­tended dead­lines for re­gasi­fied liq­ue­fied nat­u­ral gas (RLNG)-based large power projects in Pun­jab.

Board of In­vest­ment (BoI) Chair­man Mif­tah Is­mail told Dawn af­ter the meet­ing that ba­sic pol­icy ob­jec­tive was to bring in new brands and re­vive some closed units to gen­er­ate healthy com­pe­ti­tion in the mar­ket, lead­ing to re­duc­tion in prices and im­prove­ment in qual­ity stan­dards.

He said the ex­ist­ing play­ers were run­ning with 20-year-old mod­els de­spite govern­ment en­cour­age­ment to roll out new mod­els and re­duce prices. "The ex­ist­ing three have not been able to bring in enough com­pe­ti­tion. As a re­sult, car prices in Pak­istan are much higher than they should be."

The pol­icy de­fined new en­trants as car­mak­ers whose mod­els are not pro­duced in Pak­istan at present and would set up green­field projects, he said. This would mean that Honda, Toy­ota and Suzuki would not be of­fered in­cen­tive fa­cil­ity which the govern­ment would pro­vide to new play­ers like Fiat, Volk­swa­gen, Re­nault and Nis­san. Mr Is­mail said new en­trants would be al­lowed im­port of plants not pro­duced lo­cally at 10 per cent duty and 25pc duty on lo­calised plants for five years. Th­ese rates would re­main un­changed for five years.

Si­mul­ta­ne­ously, a brown­field cat­e­gory has been cre­ated for plants like Ghand­hara-Nis­san and some oth­ers which are cur­rently ly­ing closed for var­i­ous rea­sons.

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