Regulatory policy

Government should review car policy, says PAC – Pakistan

ISLAMABAD: The import compression policy by the government to manage the balance of payments which was implemented in May 2022 has limited the operating capacity of the automotive sector to 35% of its total capacity, which has resulted in the price escalation due to fixed operational and technical constraints. costs.

Secretary Industries said as much during the Public Accounts Committee (PAC) briefing on Tuesday. The committee met under the chairmanship of Noor Alam Khan.

The committee recommended that the government review the existing car policy and provide additional consumer protection by implementing safety standards and surcharge, automatic delivery within one month, tariff rationalization on the commercial import of used cars, full capacity utilization, etc. within one month.

The Department of Industry and Production gave a full briefing on the delay in delivering the cars, followed by another briefing on importing auto parts from the Department of Commerce, and the Federal Board of Revenue ( FBR) gave a briefing on taxes on CKD, CBU and commercial importation of vehicles.

In a decision, the PAC chairman said that in the documents the word car manufacturers would be replaced with car assemblers because they did not locate their models in accordance with the auto-dilation program.

It was stated in the briefing that the ministry is considering various options to streamline car delivery. These proposals are moving towards a wholesale retail mechanism for sales through a dealership.

The restriction of the reservation beyond 2 to 3 months and the safety rules including brakes, lights, seats, seat belts, tires, anti-theft, airbags, etc. have been included for mandatory compliance through inclusion in the manufacture of relevant SRO surveillance vehicles.

The Secretary further revealed that for late deliveries in line with government policy, consumers were reimbursed Rs 1.9 billion from November 2021 to April 2022.

The membership committee expressed their displeasure with the delay in delivering the cars and being overcharged despite depositing the 100% payment and the car assemblers are operating 50% of their installed capacity, which encourages clean money on the new cars.

The Industries Secretary informed that the installed capacity of automakers to produce vehicles is 500,600 against an annual demand of 300,000 units.

In fiscal year 2021-22, 322,754 units were sold compared to 2020-21 where 27,592 units were sold. It was also said that after facing a contraction in sales due to Covid-19 during the year 2019-2020, sales volumes have gradually increased, however, the economic slowdown, the increase in rates interest rates and tighter financing needs by the State Bank of Pakistan (SBP) had a negative impact on car sales.

He recommended the government ease regulatory duties on the commercial import of used cars and also reduce the age limit from three years to five years for cars up to 1,300 cc.

The committee further ordered to deliver those who booked a car against 100% free of charge and also to improve the ability to discourage themselves.

Asim Ahmad (the current Chairman) briefed the committee members on the rate of statutory duties, federal excise duties and other taxes at the import stage of CKDs and CBUs.

He said Rs 431 billion was received in the 2020-21 financial year and Rs 787 billion in the 2021-22 financial year. During the current fiscal year till October 12, 2022, an amount of Rs 46 billion has been collected.

Copyright Business Recorder, 2022