PAMA concerns on CCP report

KARACHI: Pakistan Automotive Manufacturers Association PAMA here Wednesday expressed reservations on the Competition Commission of Pakistan’s CCP report of January 2013.

Abdul Waheed, Director General PAMA in a statement termed the report as arbitrary, unfair and distressful for the automotive sector. He said while preparing the report CCP did not realize the figures it incorporated in the report that it would unduly damage the industry which contributes USD 3.6billion to the GDP and churns out USD O.82 billion in the revenues with an investment of USD 1.09 billion and direct employment to 215,000 persons.

DG PAMA said the “auto Industry leads the large scale manufacturing of the country, hugely contributing to the country’s GDP and the revenues while bringing in long term local and foreign investments generating widespread employment opportunities and opening up avenues for the country to have high technology and attain modern systems of the outside industrial world.”

He was grieved that notwithstanding the fact that the CCP itself did not even own its contents, as per the disclaimer printed on the report, yet it chose to put it on its official website for public consumption that would result in ultimate disrepute to the industry.

Abdul Waheed said that the Pakistan Automotive Manufacturers Association was never in the picture while the report in question was being prepared. He expressed his dismay over the CCP’s report’s subjective findings and recommendations which, in his views, are highly damaging for investment and business environment of the country.

In a letter to CCP Chairperson he said the report in question was flawed as it is not based on the competition issues arising out intra local automobile players. Instead, it drifts to draw parallel between local industry with the illegal business of trader mafia of used cars whose primary source of activity emanate from illegal purchase of documents from an overseas Pakistani.

Such trading activity of used cars, which by no mean is comparable to brand new cars which are manufactured here in Pakistan by the established industry who’s each operation is standardized and documented and the accounts are published and shares traded in bourses of the country. In other words a car used for over 5 years abroad and imported in the country by an apparently illegal owner/importer who does not keep any document for official scrutiny has been, unfortunately, taken as a basis for determining the competition issues by the CCoP.

Such a report coming from a serious agency like the CCP tantamount to promoting the trader mafia without realizing the fact that it would irreversibly damage the industry and would result in shutting down the already traumatized downstream vending industry making thousands jobless.

Nowhere in the world has a country invited foreign investment in manufacturing goods locally and, at the same time, opening up its market for imports of used goods of same category as suggested by this report.

It would have been worthwhile if CCP had suggested measures to promote competition by attracting more investments and promoting further expansion and introduction of more models by local OEMs in order to encourage competition.

He regretted that concurrent official support to used car lobby over the years has not only impeded the natural growth of the industry it rather is a reason for its downturn and redundancies and closure of the companies in the recent past. Investments like these need adequate protection which is given everywhere in the world which, in case of Pakistan, is the least in comparison with other regional car making countries, given the prevalent rates of import duties on new CBU cars which are freely importable in Pakistan. It is interesting to note that the report did not discuss any case of a new imported car, visavis locally produced car.

Abdul Waheed pointing out the failings of the CCP’s report said it did not discuss the damaging effects on local industry of used cars imported with huge concessions in the duty and taxes which is causing distortion and is loss of billions to the exchequer. On the contrary the report suggested that commercial imports of used cars should be opened without realizing that it would mean shutting down the industry and degenerating the country into junkyard. While suggesting all this, report is concerned about the emission standards in the country: a travesty indeed.

He said that the report contained false reporting that local companies hike cars prices at the same time because recently merely one player increased prices of their brands. If prices of cars are increased in a period of few months by three leading companies, it happens because the cost of business surges same for all players including spare parts, rupee depreciation against dollar and utility charges. While ignoring these facts the report completely and conveniently ignores the fact that used car importers have no mechanism of price control whatsoever neither the CCP has suggested any to protect the consumers of such cars. Perhaps, CCP has no jurisdiction on their activities yet it appears to be on their side!

While campaigning for used cars the CCP, in its report, accused the industry to be responsible for the issuance of the CGO that meant putting the determination of the age and depreciation of a used car on the same scale as it would be an ultimate tool for them to increase the prices of local cars with the year change. This is too farfetched as it would mean conniving with FBR, who issued the CGO. Further, it was flawed as the price increase did not take place in the manner predicted in the CCP’s theory.

DG PAMA suggested that CCP research department should have compared the auto industry policies of different countries of similar economies and their competition issues on the subject and also should have discussed with the industry and visited the industrial set up in Pakistan both at the OEMs and vendors before producing a report.

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