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Pakistan’s automobile industry is playing a leading role as large scale manufacturing sector of Pakistan that serves as backbone of the economy and has immense potential for growth.

Last year, federal government has announced relaxation in the import policy for import of used cars under Transfer of Residence, Gift Scheme and Personal Baggage Scheme. Under this scheme, five years old models can be imported at less custom duties.  Moreover, depreciation allowance on these imported used vehicles is also available up to four years.

Such policies of the government strongly affect the businesses so being the student of business education; you are required to evaluate the effects of relaxed import policy regarding import of used cars on local automobile industry (identify at least three (03) effects) and then on economy (identify at least two (02) effects).

 

What will be solution...?????????????????

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iscussion Question:

Pakistan’s automobile industry is playing a leading role as large scale manufacturing sector of Pakistan that serves as backbone of the economy and has immense potential for growth.

Last year, federal government has announced relaxation in the import policy for import of used cars under Transfer of Residence, Gift Scheme and Personal Baggage Scheme. Under this scheme, five years old models can be imported at less custom duties.  Moreover, depreciation allowance on these imported used vehicles is also available up to four years. 

Such policies of the government strongly affect the businesses so being the student of business education; you are required to evaluate the effects of relaxed import policy regarding import of used cars on local automobile industry (identify at least three (03) effects) and then on economy (identify at least two (02) effects).

Bundles of thnx...........

This is question not idea or answer. 

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MGT211 GDB # 2 Solution Last Date:06-11-2012

MGT211 GDB # 2 Solution Last Date:06-11-2012

1). To protect fledgling domestic industries from foreign competition.
2). To protect aging and inefficient domestic industries from foreign competition.
3). To protect domestic producers from dumping by foreign companies or governments. Dumping occurs when a foreign company charges a price in the domestic market which is "too low". In most instances "too low" is generally understood to be a price which is lower in a foreign market than the price in the domestic market. In other instances "too low" means a price which is below cost, so the producer is losing money.
The cost of tariffs to the economy is not trivial. The World Bank estimates that if all barriers to trade such as tariffs were eliminated, the global economy would expand by 830 billion dollars by 2015. The economy effect of tariffs can be broken down into two components:
The impact to the country which has a tariff imposed on it.
The impact to the country imposing the tariff.
In almost all instances the tariff causes a net loss to the economies of both the country imposing the tariff and the country the tariff is imposed on.
Impact of the economy of a country with the tariff imposed on it.
It is easy to see why a foreign tariff hurts the economy of a country. A foreign tariff raises the costs of domestic producers which causes them to sell less in those foreign markets. In the case of the softwood lumber dispute, it is estimated that recent American tariffs have cost Canadian lumber producers 1.5 billion Canadian dollars. Producers cut production due to this reduction in demand which causes jobs to be lost. These job losses impact other industries as the demand for consumer products decreases because of the reduced employment level. Foreign tariffs, along with other forms of market restrictions, cause a decline in the economic health of a nation.


Another 


3 EFFECT ON LOCAL AUTOMOBILE COMPANY:
In general: If import duty reduce then economy will destroy. Because menufacturing unit will close. People purchase imported items on low price and pakistanani goods are not sold mean company closed.
Explanation: The levying of tariffs is often highly politicized. The possibility of increased competition from imported goods can threaten domestic industries. These domestic companies may fire workers or shift production abroad to cut costs, which means higher unemployment and a less happy electorate. 

2). A government may levy a tariff on products that it feels could endanger its population. For example, South Korea may place a tariff on imported beef from the United States if it thinks that the goods could be tainted with disease.

3). The use of tariffs to protect infant industries can be seen by the Import Substitution Industrialization (ISI) strategy employed by many developing nations. The government of a developing economy will levy tariffs on imported goods in industries in which it wants to foster growth.

2 EFFECT ON ECONOMY:
Import duty is a income of Pakistan Govt. When relaxation is made on the import duty. Its mean income of the govt. will automatically decrease.
Purchasing power of the economy will automatically increase. Because cast will decrease. For example: If imort duty will 20% then cost will be 1,000 but after relation like 10% in import duty. Cost will autiomaticaly decrease like 800.

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One more idea Solution

MGT211_GDB No.2_SOLUTION

Attachments:

Q.1: You are required to evaluate the effects of relaxed
import policy regarding import of used cars on local
Automobile industry (identify at least three (03) effects?
SOLUTION:
A. In general: If import duty reduces then economy will destroy. Because manufacturing
unit will close. People purchase imported items on low price and Pakistani goods are
not sold mean company closed.
Explanation: The levying of tariffs is often highly politicized. The possibility of
increased competition from imported goods can threaten domestic industries. These
domestic companies may fire workers or shift production abroad to cut costs, which
means higher unemployment and a less happy electorate.
B. A government may levy a tariff on products that it feels could endanger its
population. For example, South Korea may place a tariff on imported beef from the
United States if it thinks that the goods could be tainted with disease.
C. The use of tariffs to protect infant industries can be seen by the Import Substitution
Industrialization (ISI) strategy employed by many developing nations. The
government of a developing economy will levy tariffs on imported goods in industries
in which it wants to foster growth.

Q.2: You are required to evaluate the effects of relaxed
import policy regarding import of used cars on economy
(identify at least two (02) effects)?
SOLUTION:
A. Import duty is a income of Pakistan Govt. When relaxation is made on the import duty.
Its mean income of the govt. will automatically decrease.
B. Purchasing power of the economy will automatically increase. Because cast will
decrease. For example: If import duty will 20% then cost will be 1,000 but after relation
like 10% in import duty. Cost will automatically decrease like 800.

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