Much delayed Auto Policy 2016-21 finally approved

[The Sandman]

19 Mar 2016,

ISLAMABAD - The Economic Coordination Committee (ECC) of the Cabinet on Friday approved much delayed Automotive Development Policy 2016-21 aimed at facilitating higher volumes, better investment, enhanced competition and better quality with latest technology.

The ECC, which met under the chair of Finance Minister Ishaq Dar, has also approved levy of 15 percent additional regulatory duty on import of finished iron and steel products till 30th June 2016. ECC also approved levy of regulatory duty @10 percent on aluminum alloy. The decision would help in generating Rs1.7 billion for the government in remaining few months of the ongoing financial year.

The top economic decision making body of the country, the ECC allowed increase in the limit of the GoP guarantees for PIA from Rs. 146 billion to Rs. 151 billion to help the National Carrier pay its liabilities. The ECC gave approval for extension in the date for reduced withholding tax @ 0.4 percent for non-filers under section 236p of the Income Tax Ordinance, 2001 up to 31st March, 2016.

The Committee after detailed deliberations approved the Automotive Development Policy 2016-21. The policy aims to facilitate higher volumes, better investment, enhanced competition and better quality with latest technology. The Policy also aims to create a balance between industrial growth and tariffs to ensure sustainability for all stakeholders. It would also ensure consumer welfare besides aiming at providing policy consistency and predictability for investors. The Automotive Development Policy (ADP) 2016-21 will be formally launched on Monday, 21 March, 2016.

In October 2013, the ECC constituted a committee to propose the new automobile policy. The government took two and half years to approve the policy. The government under new Auto policy would give incentives to new the entrants in this sector, as duty on localised parts will be 10 per cent whereas duty on non-localised parts will be 25 per cent for five years, however, no localisation plan is in hand for the new entrants. This implies that after five years, tariff for new entrants will be doubled. Similar incentives are being offered for revival of closed units for three years.

However, the government has not offered any incentive to the existing Original Equipments Manufacturers (OEMs). Under the policy, the amount of advance payment will be limited up to 50 percent of the total price. Price and delivery schedule, not exceeding two months will be firmed up at the time of booking. Any delay over two months will result in a discount @ Kibour + 2 per cent prevailing on the date of final delivery / settlement from the final payment; this will help shorten delivery lead time.
The government in the policy has also offered incentives to revive closed units for three years.
Much delayed Auto Policy 2016-21 finally approved

 

[!eon]

The ECC, which met under the chair of Finance Minister Ishaq Dar, has also approved levy of 15 percent additional regulatory duty on import of finished iron and steel products till 30th June 2016. ECC also approved levy of regulatory duty @10 percent on aluminum alloy.

People were dreaming new brands VW, Nissan and don't know what more.

 

[Azog]

Incentives

The government has allowed one-off duty-free import of plant and machinery for setting up an assembly and manufacturing facility. It has also permitted import of 100 vehicles of the same variants in the form of completely built units (CBUs) at 50% of the prevailing duty for test marketing after the groundbreaking of the project.

A major incentive for the new investors is the reduced 10% customs duty on non-localised parts for five years against the prevailing 32.5%. For existing investors, the duty will be slashed by 2.5% to 30% from the new fiscal year 2016-17.

Similarly, localised parts can be imported by the new entrants at 25% duty compared to the current 50% for five years. For existing players, the duty on import of localised parts will be brought down to 45% from the new fiscal year, beginning July.

In the CBU category, customs duty on cars up to 1,800cc engine capacity has been reduced by 10% for two years – 2017-18 and 2018-19. This will be applicable to the existing players as well and will encourage reduction in car prices.

A single duty rate will be applied to the localised and non-localised parts after five years of the new policy. The present duty structure will continue for seven years for the new investors.

The Board of Investment will provide a single point of contact for all new investors. They will be required to submit a detailed business plan and relevant documents to the Engineering Development Board (EDB) for assessment.

The Ministry of Industries, on recommendation of the EDB, will approve the new investor under the relevant category.

Sick unit revival

The non-localised parts can be imported at 10% and localised parts at 25% duty for three years for the revival of a sick unit.

Auto policy approved, door wide open for new entrant - The Express Tribune

 

[Kurlang]

I am not expert of auto sector but some one can tell whether monopoly of Suzuki, Honda and Toyota has been broken or not.

 

[Icarus]

I am not expert of auto sector but some one can tell whether monopoly of Suzuki, Honda and Toyota has been broken or not.

Not yet.

 

[Azog]

I am not expert of auto sector but some one can tell whether monopoly of Suzuki, Honda and Toyota has been broken or not.

First of all new investors need to invest. I think there needs to be good alternatives to GLIs, Civics, City

There will be huge market for smaller cars because of Middle class families. The imported small cars are junk considering the price because most of them are accidental

 

[Max Pain]

People were dreaming new brands VW, Nissan and don't know what more.

what do you think shouldve been on those highlighted lines to attract VW and other European Companies?

 

[!eon]

what do you think shouldve been on those highlighted lines to attract VW and other European Companies?

Only point is, how much they are willing to pay in bribes.
That's the only way things work in Pakistan.
All other decorated announcements, polices, laws etc etc are just on papers and point scoring to make the ordinary people fool.