Pakistan frames new auto policy to target European carmakers

Worker assemble engines at the Indus Motor Company Limited's plant in Karachi, Pakistan

The government has approved a new automobile policy, which offers tax incentives to new entrants to help them establish manufacturing units and compete effectively with the three well-entrenched assemblers.
The policy mainly aims at attracting European carmakers to invest in the Pakistani market.
After a hiatus of almost two and a half years, the Economic Coordination Committee, or ECC, of the cabinet gave the go-ahead to the Automotive Development Policy 2016-21, according to an announcement made by the Ministry of Finance.
However, the government did not change its policy for used car imports, leaving consumers with a narrow range of choice until new brands of good quality are produced in the domestic market. The Federal Board of Revenue had proposed that imports of up to five-year-old used cars should be allowed compared to the current three-year ceiling. It also called for opening imports for commercial purposes.
The automotive policy will be formally launched on Monday. Industries and Production Minister Ghulam Murtaza Jatoi did not attend the ECC meeting.
"The existing three car manufacturers will not be entitled to the benefits that are being offered to the new investors," said Miftah Ismail, chairman of the Board of Investment, while talking to the Express Tribune.
The auto policy was aimed at enhancing consumer welfare and boosting competition besides attracting new players, he added. 
Ismail said greater localisation of auto parts had been ensured in the policy and in case the new entrants were unable to achieve the targets, they would be penalised.
Contrary to the demand of Volkswagen, the definition of medium knocked-down unit has been removed from the policy.
The Pakistan government wants European brands such as Fiat, Audi or Volkswagen to establish its plant in the country.
- business@khaleejtimes.com