Auto industry is one of the best earning sectors in many countries around the world and all the dynamics and contributing factors are available for the promotion of this sector in Pakistan. The country has strong subsidiary industry but it is always been overlooked by the police makers and the political elite at the helm of affairs. Ignoring this vital sector is leading the nation to nowhere as the subsidiary or the cottage industry is the base of the industrialization of the developed economies including Japan, Korea and China. The present government was expected to announce its auto policy this year, but the matter is being deferred on one pretext or the other and Finance Minister Ishaq Dar, who is also the chairman of the Economic Co-ordination Committee of the Cabinet, has yet to pay attention on this sector.
Earlier, the Federal Board of Revenue had expressed some reservations about the proposed incentives for the new entrants in the industry and the matter was deferred without reaching a conclusion. A committee was entrusted with the job to prepare the new auto policy, but it has yet to define limits and parameters for the new scheme of things in the background of the present auto policy which is not consumer friendly. The exorbitant prices of vehicles is not in the interest of the companies, government and the consumers alike whereas international safety and quality standards are often ignored in the manufacturing of the vehicles at a local level. The government has to work on two points. How much to allow the import of foreign brands and how many vehicles should be produced annually in the local manufacturing units. The vehicles produced in the country should have indigenous touch as just assembling does produce revenues, but it keeps the scope of the industry within limits. There is a need to rationalize tax regime as the demand of the vehicles will grow at a fast rate in the coming years and low tariffs will definitely increase the scope and volume of auto industry in the country.
Till now only Japanese companies are allowed to building assembling plants in Pakistan and reliance on a single country only lead to a blind alley at the end of the day. According to the Economic Survey 2014-15, Pakistan owes $5.5 billion to Japan and it should not be forgotten that strings of economic and political interests are always attached with loans and grants from any country. Therefore, instead of accepting loans and grants, the policy makers should insist on direct foreign investment in the country to boost the economy. No doubt Pakistan has vast experience and potential to emerge as the leading car and spare parts manufacturer and the government can earn a lot from this sector if a prudent auto policy is devised and implemented.
