The State Bank of Pakistan (SBP) has supported the recommendations of the Competition Commission of Pakistan (CCP) that automobile market should be opened to import of new cars. In its annual report, the bank advocated for a balanced development in the automobile sector to create an environment of healthy competition in the country. The bank makes a comparison between automobile industries of Pakistan and India and assesses the failure of the local industry to provide quality vehicles and ranges of choicesto the consumers at competitive prices despite enjoying a blanket of protection from the government since 1985. Pakistan has just four assembling plants and 12 products against 12 manufacturers and 11 products in India. Due to a vast variety of options, there is tough competition in India which goes in the benefit of the consumers.The report suggests several measures for the local automobile sector, including the formation of a long-term policy to create a healthy industrial environment, covering the manufacturing of quality auto parts to meet the country’s requirements.
According to the report, a few producers, who present a few products, are protected from foreign competitors, but they charge heavy prices.However, the report calls for a sustainable tax regime and import policy as well as steps to attract foreign direct investment in this sector. Due to rising petroleum prices all over the world, it will be plausible to encourage the manufacturing of small fuel efficient cars in the country. Pakistan had launched the deletion programme in 1985, which had to be completed by 2006, but the industry failed to achieve the desired results.On another note, under the WTO’s agreement on trade related investment measures, countries are not allowed to place local content requirements.Pakistan had also adopted a tariff based system for a period between financial year 2006 and 2012, envisaging developmentof high value-added sub-sector in the auto industry and to produce 500,000 cars in fiscal year 2011-12. However, only 132,661 cars were produced in 2012, much blow the target. The report says that the auto sector still depends on imports, as local manufacturing is limited to sheet metal parts, interior trim, seats, rubber and plastic parts, batteries, wheel rims, tyres, and lighting accessories. Pakistan lacks ability to produce engine parts of international standards which are still imported from Japan by spending precious foreign exchange.
At a time when a heavy competition has started among the world car makers, the Pakistani auto industry is still at a nascent stage, pointing finger at the incapacity and inability of the nation. Japan is lesser known in the development of technology, but popular in diversification of products invented in the United States and Germany. The economy grows when industry grows, but it seems we are destined to lag behind every positive development in the world.
Pakistan is comparatively a new nation, but old people with great minds. But nations only develop when they have visionary and sincere leadership and probably Pakistan has an inherent deficiency of this element.
