The government sent this message to three Original Equipment Manufacturers (OEMs) through a delegation of Pakistan Association of Automotive Parts Accessories Manufacturers (PAAPAM) which met Commerce Minister Engineer Khurram Dastgir Khan and Chairman, Privatisation Commission/deputy convenor Muhammad Zubair to discuss the new auto policy early this week. The objective of the meeting was to seek stakeholders' support to the new auto policy prior to its submission to the Economic Co-ordination Committee (ECC) of the Cabinet.
Commerce Minister, sources said, maintained that transparency in auto policy will be ensured.
"Our other concern is that presently three-year-old used cars which are being imported into Pakistan are a banned item and back door is being used to import 50,000 used cars in Pakistan per annum," claimed the Commerce Minister.
The government will have to monitor market behaviour of local car assemblers in case import of used cars is restricted which has flooded the market through using backdoor channels. If the government heeds the auto industry's demand to limit the import of used cars then the industry in turn has to protect the rights of consumers to maintain balance, the Minister added.
"In case the government places severe restrictions on import of used cars, local OEMs have to guarantee that they will not adopt any oligopolistic behaviour and start over charging consumers," said Commerce Minister in a chat with Business Recorder.
Presently three-year-old used cars are being imported under gift scheme, transfer of residence scheme and personal baggage scheme. However, importers networks 'purchase' passports from overseas Pakistanis against $ 1500 each and use the documents to import used cars.
"We have to remove distortions in the auto market. We are part of auto policy discussions. New auto policy will be for three years instead of five years so that there should be stability and predictability in the market. Of course, we want new entrants in the country and leverage Pakistan's geopolitical position as a transit and manufacturing hub between South and Central Asia," Khurram Dastgir maintained. PAAPAM requested Commerce Ministry to take restrictive measures to rein in illegal import of used cars but failed to guarantee the government that local OEMs will not increase price of cars in case restrictive measures to curb used cars import are effected.
Commerce Minister argued that the government does not want any kind of distortion in cars' import policy and at the same time urged local industry to start export of cars as regional suppliers. The sources said, new investors are also shy to invest in Pakistan due to unchecked import of used cars in Pakistan.
PAAPAM also sought Commerce Minister's help at the time when new auto policy comes under discussion in the Economic Co-ordination Committee (ECC) of the Cabinet.
PAAPAM's representatives stated that local engineering industry is deprived of Rs 400,000 to Rs 450,000 per used car because it can not supply spare parts.
Government's interest is that there should be new investment in auto sector because the government wants to create high quality employment in the country.
"New entrants should come into the market and PAAPAM's view has merit that until 2007 there were eight manufacturers in Pakistan and most of them have closed their plants," he continued.
The government wants quality employment in the country along with new technology and investment. If new companies and new investment comes into Pakistan it will ensure comparative market and consumers will get reasonably priced cars.
"I told PAAPAM that if the government has to allow import of used cars, we will allow commercial import of used cars. The government can put severe restrictions on commercial import of used cars. However, transparency in auto policy is very important," Khurram further added.