The Pakistani government, in its official auto policy, has offered generous import duties to foreign car makers to ease the grip of the renowned Japanese brands already dominating the local market. The brands like Honda, Toyota and Suzuki are available at high prices, but are low in standards and specifications as compared to imported brands. Most of the incentives in the auto policy are offered to the new entrants, but the companies already in the field are largely ignored, giving a severe blow to the efforts of a healthy competition among the car makers. So far, the government thrust was to cater to the need of the local market, a policy which needs to be revised. Pakistan has all the economic and commercial sentiments not only to cater to the needs of the local market, but also export market. The economic corridor is blessing for the country if it is utilized to attract foreign investment in the auto sector. There is a political government in the office and security concerns are mostly overcome as peace and stability are returning to the country.
Whether they are European or the Japanese brands, Pakistan has the potential to become a hub of the auto sector. The only needs to do is to offer tax exemptions and ensure security to the foreign auto manufacturers. The country’s economy is growing and it is in the list of emerging economies. It is a big country with large human resources and the foreign investors can make huge profits in Pakistan. However, the country’s policymakers should also understand that any threat to investors will ruin everything. During the previous Pakistan People’s Party government, a renowned car brand reportedly shifted its business to India due to circumstances created by the men in authority. Now the government is trying to woo manufacturers of Fiat, Renault, Volkswagen and it is imperative to protect their investment under the law. The brands already in the field also need incentives to enhance their production capacity and sale. Pakistan has a small auto market, but big export potentials which need to be utilized.
The government institutions which are responsible for attracting foreign investment are marred by mismanagement, corruption and bureaucratic procedures. The heads of the institutions are appointed on political grounds rather than on merit. Millions of rupees are spent on salaries and perks annually without any utility. The government will have to bring basic changes in the bureaucratic structure if it really wants development of the country. The government will also have to revise sales tax on cars to create demand in the middle class.
