THE government has dismissed the perception that it is wavering on the implementation of the Automotive Development Policy 2016-21. However, it does not rule out the possibility of unintended missteps in the initial phase of policy enforcement.

“The policy is paying rich dividends, so why would we vacillate? Millions of dollars have already been invested since the launch of the policy,” Engineering Development Board (EDB) CEO Mirza Nasim Baig tells Dawn over the phone from Islamabad.

“We are both sincere and serious. The last policy (2008-13) fell flat on its objectives. But the current one is succeeding as it is aimed at addressing imperfections in the auto market by paving the way for new entrants in the sector which is expected to expand further with higher economic growth as CPEC gains materialise,” he says.

In the first two years since the policy was launched in July 2016, six new investors have landed in the country, and the applications of nine companies, including some reputable global brands, are in the pipeline, he says.

“Yes, we are fallible. However, processes are in place in the EDB and the Ministry of Industries to make amends. For example, we reversed the decision to permit aspiring auto investors to import 100 vehicles duty-free for a test run, as the facility could be abused,” he adds.

“We are open and ready to redress complaints that do not compromise the direction and spirit of the policy,” he says when attention is drawn to a case where an old and a new automaker have locked horns, threatening to approach the court.

“I am aware of several cases of ongoing confrontation. The case in question is with the ministry that is engaging all stakeholders, and I am confident that it will be decided on merit. We can’t afford any controversy at this juncture.”

Earlier, it was learnt that the greenfield status was granted last month to Foton JW Auto Park, owned by JW SEZ (formerly Ruba SEZ). Master Motors, a company already active in the assembly and sale of commercial vehicles in Pakistan, was upset with the decision as it hurts its business.

Master Motors CEO Nadeem Malik was not accessible. Jahanzeb Khan, the company’s senior general manager, argues that granting privileged status to Foton JW Auto Park gives the company an unfair 30 per cent edge in the cost of commercial vehicles that Master already assembles and sells in Pakistan.

Foton JW Auto Park claims to be the sole licensee of Beiqi Foton Motor of China, authorised to assemble and sell products under the brand Foton. Previously, it also manufactured and sold the brand Forland.

“Forget about what happens to us or our business; is the decision not in contravention of the auto policy? The net impact of such a move will not be positive for the economy. We see no logic in promoting new investment that kills an operational project,” says a source in Master Motors.

For instance, the current auto policy defines greenfield investment “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/manufactured in Pakistan”.

The auto policy statement justifies the introduction of these incentives as: “A new manufacturer under Automotive Development Policy (2016-21) establishing a maiden assembly facility will invariably need separate treatment and greater incentives in the early years to enable it to introduce its brand, develop a market niche and share, create a distribution and after-sales service networks, and develop a part manufacturer base.”

When reached over the phone, Foton JW Auto Park Chief Operating Officer Hamid Rasul was flabbergasted. In a written response to the allegations, he said: “Nothing could be further from the truth. We secured the status after a long-drawn process of scrutiny by the relevant departments. Everything has been done in a perfectly transparent manner. Why would government officials stick their neck out if we were simply rebadging?”

“The fact is that the company that is raising objections was not authorised to manufacture the said brand in Pakistan. My company has provided a signed letter from the parent company, Beiqi Foton Motor, attested by the Pakistan Embassy in China and the Chinese consulate in Pakistan with our application to the ministry.

“As far as we know, there is a lawsuit from Forland against the said company for illegally assembling vehicles in Pakistan,” Mr Rasul maintains, confirming that his company has already acquired 40 acres land in Lahore, and the equipment for the project has arrived in Pakistan. “We are hardly weeks away from putting up the plant,” he says.

“The regulatory oversight and the right interventions are necessary for free market to deliver. In Pakistan, for decades, dominant market players colluded more than they competed with their eyes on profit margins at the cost of innovation and fair pricing,” a market watcher commented.

“Despite tall claims, even today full payment is not enough for the instant delivery of a locally assembled car. Desperate buyers pay hefty premiums to fetch a car that is often worth less than the price in terms of design and model,” he adds.

Published in Dawn, The Business and Finance Weekly, March 26th, 2018