Pakistan Automobile Manufacturers Association (PAMA) is displeased over the absence of measures to bring down the cost of production or to enhance vehicle sales in the recently announced Financial Budget 2020-21.
According to PAMA Director General Abdul Waheed Khan, the auto industry was expecting a stimulus package at least in the form of withdrawal of unnecessary and avoidable taxes such as Additional Customs Duty (ACD), Additional Sales Tax (AST), Federal Excise Duty (FED) of 2.5-7.5% depending on engine displacement and the turnover tax. While the budget had nothing in this regard, he said the government did not even consider the association’s proposals regarding the advance tax under Section 148 or corporate tax or other important measures.
The local auto industry is going through the worst period ever with sales reduced by 50% to up to 80% in various segments during the 11 months of the current fiscal year leading to depleted revenue collection.
Abdul Waheed Khan added that the auto industry has suffered due to frequent policy changes and other factors like exchange rate parity, demand collapse and the recent COVID-19 lock downs. He said:
“The government should have announced a stimulus package in Budget FY2020-21 to revive the auto industry.”
According to former chairman of Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) Mashood Ali Khan, said the budget has not provided any relief to the ailing auto sector. He said the government should have abolished ACD, AST and FED to bring down vehicle prices however the budget has nothing for auto manufacturers. Mashood warned that manufacturers would face hard times in coming months in absence of any relief from the government and sluggish demand. He added:
“While existing assemblers and vendors will suffer badly due to falling sales and lack of support from the budgetary measures, Pakistan is unlikely to witness any fresh investment as the budget lacks any incentives.”
It is pertinent to mention that local auto assemblers had sought immediate government attention including a stimulus package to deal with the impact of the coronavirus pandemic and massive slowdown in vehicle sales. However the government has shown a cold shoulder to these demands.