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‘Ministry of Industries must design some mechanism to regulate the local cars prices’

| August 27, 2020

Islamabad : Federation of Pakistan Chambers of Commerce and Industry Standing Committee, Former Chairman and Businessmen Panel Secretary General (Federal) Ahmad Jawad on Wednesday says consumer welfare is altogether missing as evident from high prices, less variety and low quality of vehicles being assembled in Pakistan.

 

We urged the government to announce special slab to reduce the prices of locally assembled cars to facilitate the masses.
It was totally unjustified that local manufactures revised their car prices whenever they desired and without even getting approval from the regulator. The Ministry of Industries must devise a mechanism to regulate the local assemblers’ prices, he added.
He said “It is pity for the public to get the price of Suzuki Alto of 12 lac, a 43 lacs for Honda Civic with a normal variant and same in the case with Toyota Corolla Altis variants” despite all these manufacturers have manufactured the cars locally except to import engine and may be fuel tank for safety standards but they always raise their prices with a parity of dollar against PKR which is unjustified”.

He questioned if local manufacturers have continuously increased their vehicle prices with the dollar volatility then what’s the benefit for masses of the local industry ? it’s more better that government may reduce the import duties on brand new vehicles, so that masses may get benefit out of it and at least they enjoyed their machines with due international standards and safety measures.

 

 Jawas also told all local manufacturers have raised prices at a time when the economy is slipping into a recession as the GDP growth forecast is negative 1.5% for the fiscal year ending June 2020; traditionally the automaker’s strategy has been to protect profitability. By raising prices, they try to keep profit margins normal so they can remain in profit and that could be witnessed in their annual results before Pakistan Stock Exchange.

 

However he mentioned FBR policy board may also suggest some releif tax measures to reduce the cost of locally produced vehicles and make the same more affordable.
BMP official also told average effective tariff rate of 11.2% in Pakistan is the highest in the region against 10.6% in Bangladesh, 7.5% in India, 7.0% in Sri Lanka, 5.2% in China, and 4.5% in Malaysia.

In Pakistan Manufacturers enjoy exemptions and concessions on the import of items, which if imported by others are liable to duties and other charges. Consequently, the local manufactures neither developed their capacity nor upgraded technology to improve quality for their captive market.

He also pointed out that protection to sectors like auto and textile is high in Pakistan and consumer welfare is totally missing from the entire scheme of tariff. Despite high protection and multiple export promotion schemes, however, local manufacturing is weak and exports are stagnant.

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