KARACHI: The State Bank of Pakistan`s (SBP) decision to impose 100 per cent cash margin requirement on import of certain goods including motor vehicles (both in CBU and CKD condition) has irked auto sector stakeholders.

When contacted auto assemblers said the industry was hoping for growth after a phase of stagnation but this decision would hit the industry hard.

The parts imported under completely knocked-down (CKD) units are input material for vehicle manufacturing.

We would have supported the regulation had the full cash margin been imposed on import of finished goods, which in case of automotives are completely built-up (CBU) units, they said. The imposition of 100pc cashmargin on import of CKD would shake the confidence of foreign investors and also increase the cost of auto manufacturing in the country, assemblers said.

This measure would hurt competitiveness of locally assembled cars to imported used cars that cross in under baggage scheme, normally paid for through TT remittances and other channels, they said.

Assemblers urged the SBP to exclude import of CKD units from the requirement of 100pc cash margin to ensure a level playing field to existing vehicle manuf acturers.

According to figures of Pakistan Bureau of Statistics (PBS), import of CKD/SKD kits in July-Jan 2016-17 went up by 25pc to $360 million from $280m in same period of last fiscal which suggest that passenger car demand had been going brisk.

Chairman All Pakistan MotorDealers Association (APMDA), H.M.

Shahzad said the State Bank`s decision would not hurt used car importers as they only bring used vehicles under baggage, transfer of residence and gift scheme mainly from Japan.

He said the share of 660-1,000cc used cars in overall imports is 90pc, with most of these arriving from Japan.

Total imports of used vehicles swelled to 36,937 units in July-Jan 2016-17 from 32,674 units in the same period of last fiscal. SBP was of the view that this regulatory measure would discourage the import of these items and ease pressure on foreign exchange reserves.

Assemblers meeting Since the auto sector is no longer his domain, he cannot do anything for investors and assemblers, Federal Minister for Water and Power Khawaja Asif said on Thursday. In a meeting with the representatives of Pak Suzuki Motor Company Limited, Al-Haj Faw Motors and Daehan Dewan Motor Company Limited, the federal minister said afterthe announcement of new auto policy the assemblers can contact Ministry of Industries and Production for their cases.

If the investment proposals of assemblers fall under the new auto policy then the government would consider the case, otherwise there is no chance for any amendment in the existing auto policy, the minister added.The three assemblers assured the federal minister that they are ready to invest billions of rupees in Pakistan.

Surprisingly these three vehicle assemblers were invited to present their investment plans and its multiplier impact on local economy before Khawaja Asif who did not give any positive signal to them.