ISLAMABAD: Alleging ‘serious non-transparency’ on part of the Economic Coordination Committee (ECC) of the cabinet and Deputy Prime Minister Chaudhry Pervaiz Elahi in extending unfair protection to local car assemblers, the National Assembly’s Standing Committee on Finance asked the government on Tuesday not to issue a notification to reduce the age limit for imported cars.
“The committee does not find transparency in the matter,” the committee’s Chairman, Khawaja Sohail Mansoor of the MQM, said. The same party’s Abdul Rashid Godil agreed with him.
“There is something very wrong in policy changes… very serious gaps that nobody is able to explain,” PPP’s member Shahnaz Wazirali said.
The committee asked the commerce ministry “not to issue statutory regulatory order (for reduction in the limit from five to three years for used imported cars as decided by the ECC) unless two studies by the National Tariff Commission (NTC) and Competition Commission of Pakistan (CCP) are completed”.
The committee was informed by an additional secretary for commerce that the industries ministry had previously submitted a summary to the ECC for reducing the age limit for imported cars, but it had been challenged by the commerce ministry because it believed the rules of business required it to suggest changes in the import-export regulations.
The ECC empowered the commerce ministry to look into the matter.
The official said the commerce ministry had engaged the NTC and CCP to study and analyse in depth the market conditions, impact of earlier policy changes, market behaviour and the cost of production before suggesting fresh changes.
While the studies were under way, the industries ministry moved another summary to the ECC that constituted a committee led by the deputy prime minister. This committee recommended reduction in the limit to three years and it was approved by the ECC.
“Now that the ECC has taken a decision, the commerce ministry is bound to issue an SRO to implement it.”
Khwaja Mansoor questioned the ECC decision when the homework was under way.
He said the decision had been taken on the desire of the deputy prime minister without waiting for the outcome of the studies.
MNA Godil said the three local car assemblers who were monopolising the market and the government’s decision-making “had a meeting and ‘setting’ with the deputy prime minister” and their wishes had been approved by the ECC.
Shahnaz Wazirali, MNA, said it was strange that policy changes were being made so abruptly, without studying various factors, and it appeared as if major decisions were being taken only on assumptions that turned out to be wrong every time. The members said the local car industry should not be described as manufacturers because they imported over 60 per cent of the components and hence could at best be called assemblers who had monopolised the market despite the fact that they were required to achieve 100 per cent local manufacturing by 2005.
‘COMMITMENT NOT HONOURED’: They said the assemblers had not honoured their commitment for 100 per cent localisation in over 25 years and they should not be given unfair protection at the cost of consumers, which was also against the World Trade Organisation rules, only on the premise of job and investment safeguards.
The car assemblers, they alleged, were fleecing and robbing the consumer almost at gunpoint by charging 100 per cent advance payment for delivery after up to four months. “They collect money free of cost, without any mark-up and charge premiums on delivery,” a member said.
“They do not make any investment, market substandard vehicles and earn profit,” another quipped.
“Even five-year-old imported cars are much better in quality and standard than brand new locally assembled cars.”
Some members said the assemblers and vendors imported raw material and parts at five to 25 per cent duties for manufacturing of cars, but utilised the facility for marketing spare parts in violation of rules despite the fact that importers of only spare parts were subjected to 65-100 per cent import duties.
The chief executive officer of the Engineering Development Board said cars of comparable make and models were 37 per cent cheaper in India than in Pakistan, but that was mainly because of economy of scale.
He could not satisfy the members why the deletion programme had not been honoured by the three car assemblers, but said the import schemes were “massively misused” by labourers and workers in the Middle East.
The parliamentarians lamented that the official had used objectionable language against individuals for ‘misuse of policy’, but he did not take any action against the assembler who had been “misusing policies, violating commitments and monopolising the market for decades”.