LAHORE - Present import policy continues to pose a threat for the local auto industry because, while import of used cars is restricted to three years, all other vehicles such as Vans, SUVs and 4x4 vehicles up to five years old are allowed to be imported under the current laws.
“Import cost of 3-year old used cars is also attractive because of lower duty rates fixed as far back as 2005, based on currency rates and car prices prevailing in the year 2005 (vide SRO 577(I)/2005). Since 2005, the parity of currencies as well as the cost of vehicles have risen significantly, but the duty rates fixed in US Dollar terms in 2005 remain unchanged. The industry representatives have time and again expressed their concerns to FBR to review the duty rates fixed in SRO 577, but despite consensus, no action has been taken so far,” Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM)’s Chairman, Munir Bana said.
“In a landmark judgment in July 2013, the Amnesty Scheme for smuggled vehicles was deemed illegal by the Islamabad High Court and ordered to be reverted back to pre-SRO position. No action has been taken by the government in this regard, so far, and a huge amount of smuggled vehicles are still available in the market” he said.
He recalled that that the IHC had declared the amnesty scheme of the Federal Board of Revenue (FBR) illegal and ordered them to impound over 50,000 vehicles. On behalf of the entire auto sector, he appealed to the Court to redirect the authorities concerned to implement its directives and prosecute the car smugglers under the law of the land.
He said that the lobby of used car importers, who made billions of rupees through misuse of import policy in the past, are again making all-out efforts to misguide the new government, while the country’s automotive industry & auto parts manufacturers are still suffering from the aftershocks of inconsistent import policies, rampant import of used cars and frequent amnesty schemes of the past government.
Mr Bana disclosed that, due to these reasons, the domestic industry witnessed a huge decline of 25% in sales of locally manufactured cars from 157,325 units in 2011-12 to 118,830 units in 2012-13, leading to a drastic fall in sales of auto parts in the country.
The PAAPAM vice chairman Usman Malik observed that the car import policy was relaxed in December 2010, when used cars of up to five-year old were allowed to be imported, but this was reverted back to 3-year old cars in December 2012 to offer relief to the local auto industry. During these two years, about 92,000 used vehicles were imported, a substantial quantity of which are still available for sale in showrooms and continues to haunt the sales of locally manufactured cars. He maintained that on top of used vehicles, 58,000 smuggled vehicles, which were legalized under the Amnesty Scheme, are also available in the market.