ISLAMABAD, 19 Feb: A sectoral study by the Competition Commission of Pakistan (CCP) highlighted that the country’s automobile industry was inward looking and protected itself through the use of regulatory instruments.

“Pakistan needs to develop the automobile industry instead of protecting it and in this regard imports have a disciplinary impact on domestic firms,” the updated CCP study on the automobile sector released here on Tuesday noted.

The study is part of the CCP’s research programme, titled, Competition Impact Assessment Studies, targetted to assess competition vulnerabilities in various sectors.

The CCP study has criticised government policies of providing protections to the local auto sector, the key among them being restrictions on the import of cars.

The study highlights that the import of cars is allowed only under the Gift, Personal and Baggage Schemes with restriction on allowable age limits, the policy for import of cars with an allowable age limit of 5 years remained in practice from December 2010 to December, 2012, and it was reduced to 3 years in December, 2012.

“Furthermore, on 31 August, 2012, the depreciation rules were also changed,” CCP said adding that if the cumulative effect of both these policy changes is taken into account, another protection was landed to protect the domestic automobile industry at the expense of consumers.

However the study has recommended that opening up of domestic market to the import of new cars at reasonable tariffs and reducing protection of local industry to allow foreign competition for the benefit of consumers.

“This increased competition will reflect in better pricing and improved quality as well as availability of cars on demand,” CCP has said, adding that it is preferable for the import of used cars to be open, rather than allowed under the Gift, Personal and Baggage Schemes.

The draft study on auto sector assesses the relevant laws and their impact on the sector; market share of the players; concentration levels of the market; and the behaviour of the players affecting competition.

The CCP has recommended that it was needed to remove entry barriers imposed by higher tariffs.

“This will make cars more affordable, push the local assemblers to be more competitive, and incentivise the automobile industry to strive towards international standards and pricing,” CCP said.