Killing the goose for an egg |
Unstable taxation regimes coupled with loopholes in the schemes that facilitate import of used cars are becoming a major drag on the auto manufacturing. Auto Industry that has contributed more than 2.5 million jobs to the national economy and brought in USD 5 billion as FDI is now feeling the heat.
Given its sensitive dependence on a bailout by the International Monetary Fund, the federal government agreed to the import of five-year-old vehicles after imposing 40 percent regulatory duty on prices. The duty may go away completely over the next few years.
The sector needs the budget makers’ prudence and due appreciation of its challenges.
The local manufacturers are dreading an increase in the import of used cars in the name of open market competition. Then International Monetary Fund is convinced that policymakers can maintain competition by allowing imports. The proposition is simple that import of used cars is detrimental to the sustainability of the current account, aggravates the balance of payments problem and replaces manufacturing with trading.
The manufacturers see Pakistan becoming a trading destination for car dealers.........