Import of taxis and buses approved

Government has unveiled a five year tariff under the Auto Industry Development Plan to increase production turnover of auto industry and annual exp-ort of parts to Rs. 600 billion and Rs. 39 billion respectively by 2011.

It has also been proposed that government technical institutes should be attached with automobile companies for practical training, similar to 'house job concept' in medical profession.

It has also proposed that the government may waive tax liability on cost of training, which would be based on quality and number of persons trained by these institutes.

The plan envisages two auto-parts vendor clusters near Port Qasim, Karachi and Motorway, Lahore to reduce monopoly of present manufacturers by encou-raging new entrants.

Companies producing over 500,000 units of cars/LCVs annually abroad will be considered 'new entrants'. AIDP also includes new entrant policy, which provides eligibility criteria, benefits and terms for new assemblers of cars/LCVs.

Bringing new entrants, probably European manufacturers will create competition in the industry where Japan 's monopoly has raised a big question on quality of cars. Besides it will also bridge the demand supply gap.

AIDP also proposes certain solutions to the government on used vehicle imports, auto exports, emission controls, strengthening of safety, standards and accreditation, registration and licensing system, road network programme and motor vehicle examination system.

Engineering Development Board claims that the programme will safely steer the industry through to the transitional phase after the introduction of Tariff Based System.

The plan discourages import of used cars through tariff measures and calls for a uniform computerized registration system for access across the country.

It will enhance auto sector's contribution in GDP to reach 5.6 % and the share in manufacturing sector to 25 % by 2011. Direct jobs will increase from 192,000 to 250,000 and indirect jobs will reach from one million to 2.5 million.

Under the plan tariff for vendors and manufacturers of parts and components which is currently zero for raw material, five per cent for sub-components and 10 per cent for components would be reduced to zero for all the three categories from next year. The import duty on completely built units of cars would not be lowered to encourage investment in auto sector, components and manufacturing.

Government will also allow the assembly of new entrants through import of 100 % CKD kit at the duty applicable to non-indigenised parts. However, they would have to provide a commitment to develop and purchase local parts to fit in locally assembled cars. Some productive asset investment incentives would also be provided to the vendors and manufacturers.

The plan will discourage the existing policy for import of used cars and trucks. Deprecia-tion on import value of used cars would be reduced from two to one per cent per month and total depreciation limited up to 25 per cent only while transfer of residence and baggage rules would implemented strictly. The draft has been forwarded to the stakeholders for comments.

On the other hand Cabinet's Economic Coordination Com-mittee once again approved duty free import of controversial 'black cabs' with new name of 'purpose-built taxis', and passenger buses.

Sources said Central Board of Revenue had recommended to the ECC that import of these taxis without duty and sales tax be allowed in CBU and CKD condition.

The taxis must have attack-resistant central division, with payment tray, wheel-chair compartment with folding ramp, meter and two-way radio system, and should be built on girder chassis. Sources said Prime Minister's Advisor on Finance, Dr. Salman Shah cleared the proposal for placing it before ECC.

CBR said in metropolitans many people use private vehicles due to poor condition of taxis /cabs, and excessive use of private vehicles was causing road congestion, parking problems and higher fuel consumption.

ECC also approved duty free import of completely built and completely knocked down CNG buses having 40 passengers' capacity.