By: Arif Habib Limited
The draft of the auto policy finally released – objectives listed below The Engineering and Development Board (EDB) recently made public the draft for the Automobile Development Policy (ADP) 2015-20. Among the key objectives, of particular interest were (i) the facilitation of higher volumes and ‘enhanced competition’, (ii) tariff rationalization for optimal industry growth, without causing a dent to tax revenues for the government, and (iii) a mid-term review of the policy in case of any new developments.
ADP – Aiming to bring new players into the industry A key theme is the proposed lowering of barriers to entry for new investors under the new ADP. The draft clearly separates new investors from existing manufacturers, postulating separate treatment for new entrants in order to provide incentives for investment, along with protection from competition early on till it establishes a base in the market. The policy further alienates new investment in three categories, namely:
Category A: This category includes Greenfield Investment, which is ‘the construction of new and independent automotive assembly and manufacturing facilities by an investor for the production of vehicles of make not already being manufactured / assembled in Pakistan.”