PAMA Demand Clarity on Incentives for New Entrants

Pakistan Automobile Manufacturers Association (PAMA) has sought clarity on the incentives given to the new entrants in the Auto Policy 2016-21. In a letter written to the Engineering Development Board (EDB) the representation of local automakers has asked EDB to specify the dates till when the incentives under the policy can be availed?

According to a PAMA official, in the light of the Auto Industry Development Committee’s (AIDC) 34th meeting’s minutes, the government seemed to give favor to an unidentified newcomer. The official said:

“Currently, one new entrant is selling and booking its vehicles without establishing a plant, while under the policy every new entrant is allowed to bring 100 CBUs for the product development and marketing.”

The 34th AIDC meeting minutes stated:

  • That the maximum incentive period is 5 years, in case of Greenfield, and 3 years in case of Brownfield, thus for those approved companies, which will start their commercial operations after June 30, 2021, the break-off dates (counted from the end date of the AOP i.e. June 30, 2021) shall be June 30, 2024 and June 3, 2026, respectively. The companies who have already started their commercial production before June 30, 2021, their incentive shall not go beyond their approved five-year business plan.
  • Those companies who have already started their commercial production before June 30, 2021, shall not be allowed to modify their business plan, unless it is covered in their agreement, without proper justification. As it may result in withdrawal of incentive as per clause 4.4 of the ADP 2016-21.
  • The clause related with Withdrawal of Incentive stated: “In case of material deviation from the approved commercial operation schedule, withdrawal of incentives shall take effect…”

PAMA in its letter to EDB stated that, “the new entrants in this regard, already in production shall be entitled to avail concession for 5 or 3 years, as the case may be, counted from the date of commercial production. However, these new entrants, also reportedly submitting revised business plans for the new models. This, submission of revised business plan, by those who have already attained commercial production, may circumvent the incentive period that may end up being more than five or three years.”

Related: H1, FY2020-21 Sales Insight

The association also requested EDB to give a detailed briefing in next AIDC meeting on the extent of incentives available to Greenfield investors under the light of AIDP 2016-21 and relevant SROs & Notifications, while industry also wanted clarity on the dates of start and end of the period of five-year incentive.

Full Story: The News

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