PAMA concerned over violation of import policy

KARACHI: The Director General, Pakistan Automotive Manufacturers Association (PAMA) expressed serious concern at the raging pace of import of used cars.

“In the first half of outgoing year (2013) the figures was 5512 units and in the second half the figure almost doubled to 11314 units for which there was no apparent justification except massive abuse of the facility by the traders. The import and detention, at the port, of over one thousand units of cars, with more than permissible age limit, is a case in point that whereas only this much have been detained may more such offending vehicles might have been released in the past,” he said in a statement.

He said: “Local industry has been highlighting the abuse of the schemes meant for overseas Pakistanis but unfortunately no action was taken against the unscrupulous importers who have continued with their illegal activities unchecked. Regrettably, now they have crossed all limits by in one go importing one thousand overage cars in blatant violation of the law. All such offending vehicles must be confiscated and criminal cases be instituted against the offenders of the law”

DG PAMA shared that over 12,000 all types used vehicles were imported during first half of FY14 which is over 12% of the total market. As there is partial exemption in duty and taxes available to used cars the huge volume of imports has deprived government of over PKR 7 billion in duty/taxes due to lower duty fixed as per SRO 577 back in 2005. It is an irony that there is much higher amount of duty on a locally manufactured car than a comparable imported used car.

He said: “It’s going to be a decade now since the amount of duty on used vehicles was fixed in SRO577; world has changed since in terms of vehicle technology, rise in the prices of steel, aluminium, rubber and plastics and the vehicle prices have also gone up globally; the contents of the SRO reflecting amount of duty has remained unchanged, notwithstanding.”

He said: “The local industry is offering brand new vehicles at the most competitive prices with complete warrantee and comprehensive after sales support thereby protecting consumer interests. In the process, the local industry provides more than 1.3 million jobs directly and indirectly and makes 2.8% contribution to the GDP. Industry continues to make sizeable investments in introducing new models which stands at staggering Rs. 92 billion. All this translates into over PKR 80 billion annually in tax revenue to the national exchequer which would go up further with increase in the volumes.”

The industry is deeply concerned over these imports which are in violation of the law and appreciates FBR and the customs authorities for not clearing the over age vehicles. Such used vehicles are neither in the interest of the consumer nor in the economy in general as it costs excessively to the economy to maintain such vehicles which have spent their prime life overseas and they would soon end up in the junkyard. Already government continues to allow up to 5 year old luxury vehicles mostly luxury SUV like Land Cruisers which also have fixed lower duty and thus deprive the government of revenues, he said.

“The auto industry of the county is a victim of uncertainty since 2008 due to government polices often changing and therefore has not revived yet. The industry’s revival and huge investment that is linked therewith is waiting for a long term stable policy by the government. But it is for the authorities to understand that manufacturing and trading cannot coexist and that often repeated episodes of gratifying the traders with the booty of liberalized used car policy will ruin the industry,” he concluded.

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