Table of contents list of acronyms
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| 4.2. RESULTS The input-output ratios for different segments of the automotive sector have been derived from the data contained in the Census of Manufacturing Industries (CMI) of 2005-06 undertaken by the Pakistan Bureau of Statistics. The tariff structure for different types of vehicles and parts as of 2011-12 is given in Table 4.1. We assume that bulk of imports of CKD and non-localised parts is on the concessionary regime as per SRO 656(1)/2006. The reduction in the rate of duty is not pronounced in the case of cars, 32.5 percent versus the statutory rate of 35 percent. However, it is more pronounced in the case of other vehicles. The estimated ERPs are presented in Table 4.2 under the two sets of assumptions. The following conclusions are reached from the ERP estimates i) If domestic prices fully reflect tariffs, then the ERPs are generally high. They range from 98 percent for small cars (cc) to as high as 374 percent for large cars above cc. This is a reflection of the very high customs duty of 75 percent on 47 large cars. The ERPs comedown sharply to between 35 percent and 113 percent for cars with the second set of assumptions. ii) The ERP on parts ranges from 32 percent to 78 percent depending upon the particular set of assumptions. iii) The ERP on motorcycles is extremely high at 196 percent under the first set of assumptions and falls to 76 percent if in the presence of intensive competition in this market the domestic price remains somewhat below the world price plus tariff. iv) In the case of trucks there appears to be a large differential between the ERPs for small and large vehicles respectively. Overall, in both sets of assumptions, there is a substantial variation in the ERPs for different types of vehicles and parts. Consequently, there could be substantial misallocation of resources within the sector and between the automotive sector and other sectors of the economy. In cases where the ERP is high there is a danger of over investment while in other sub-sectors investors maybe reluctant to enter. Clearly, the policy goal must be to move to a regime where the tariff levels are more moderate and, more or less, uniform across sub-sectors. Download 0.77 Mb. Share with your friends:
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