Facebook Facebook Facebook Facebook


Govt trying to end Suzuki’s monopoly over small cars, NA told

Posted by
Published: August 5, 2016 04:54 pm


ISLAMABAD, August 5, 2016: The Government of Pakistan has waived off entire duty import of car manufacturing plant and assembling facility, the National Assembly was told on Friday. The step has been taken to attract new investors in small car manufacturing and break the monopoly Pak Suzuki Motors in this sector.

Dr. Shizra Mansab Ali Khan Kharral had asked the government about high costs of locally manufactured automobiles. The Minister of Industries and Production admitted in his written reply that locally manufactured cars were higher in price than those available in neighboring countries. The prices of car models being produced by M/s Pak Suzuki Motor Co. Ltd., i.e. Wagon-R and Swift, are higher than available in the neighboring countries because of the low level of localization of parts; low volumes; monopolistic situation in small car segment and higher cost of production. Regarding Indus Motors Company (Toyota), it was told that prices of car models being produced by them were comparable in the region and lower than the prices of same models in India.

Currently, in car segment 1300 cc and above there is a little bit competition in the local market among three Japanese manufacturers i.e. Suzuki, Toyota and Honda. However, in small car segment there is only one manufacturer i.e. Pak Suzuki Company, who is manufacturing Mehran, Wagon-R etc. Govt. of Pakistan has taken certain initiatives in Automotive Development Policy 2016-21 to remove monopolistic environment.

Citing the concessions being made to the automobile sector for creating competition, the minister stated that duties were being waived of for Greenfield and Brownfield investors.  Greenfield Investment is defined as the installation of new and independent automotive assembly and manufacturing facilities by an investor for the production of vehicles of a make not already being assembled or manufactured in Pakistan. For the Greenfield Investments, the government allowed duty-free import of plant and machinery for setting up the assembly and/or manufacturing facility on a one-time basis.

Moreover, the import of 100 vehicles of the same variant in CBU form at 50 percent of the prevailing duty for test marketing after ground breaking of the project have been allowed. The concessional rate of customs duty at ten percent on non-localized parts and at 25 percent on localized parts for a period of five years for the manufacturing of Cars is also being offered.  The customs duty would not be enhanced for three years on import of all parts (both localized and non-localized), the minister further told.

Brownfield Investment is defined as revival of an existing assembly and/or manufacturing facilities, that is non-operational or closed on or before July 01, 2013 and the make is not in production in Pakistan since that date and that the revival is undertaken either independently by original owners or new investors or under joint venture agreement with foreign principal or by foreign principal independently through purchase of plant. Similar duty concessions as for Greenfield investors are being offered for Brownfield investors except the manufacturing plant import. Furthermore, the customs duty of localized parts has been reduced from 50% to 45% from July 01, 2016 for the existing market of automobiles.

Posted by on August 5, 2016. Filed under Latest Post,National Assembly,Questions National Assembly. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry