Protect local industry to boost economy, demand carmakers

Karachi: The importers of used cars should be held accountable by the government for violating laws as they are working against the national interests, alleged Director General Pakistan Automotive Manufacturers Association (PAMA) Abdul Waheed and Chairman Pakistan Association of Automotive Parts Accessories Manufacturers (PAAPAM) Usman Malik in a joint statement issued Monday.

These elements forge documents to import used cars, evade taxes, sell old junk cars at prices equal to locally produced new cars to the customer, and do many gimmickries to harm the national interest, they claimed.

Abdul Waheed emphasized that it is high time the government should take action against these elements a as they are doing a hefty damage to the employment base of the country through the import of thousands of used cars. He said the local auto industry is working in line with government policies while keeping the national interest intact, which in turn helps the customers, national economy, employment base, huge vending industry, and indirect employment base.

He said that on one hand the GoP is promoting import of fuel efficient Hybrid vehicles as an alternative to CNG fuelled vehicles by giving substantial relief in Duty & Taxes and on other hand it continues to allow imports of up to 5 year old high end SUVs with very high fuel consumption for which they are considered as gas guzzlers. They also do not pay full import duty as law allows depreciation allowance of up to 50%, a concession which makes these luxury vehicles affordable for ruling elites and landlords of this country – who are usually the buyers, he charged.

He said these paradoxical policies do raise lot of questions for the new government as they took some symbolic measures when they announced their first budget aimed at increasing the tax net by taxing the rich more and bring tax evaders into tax net. On the contrary, no measures are being taken to increase tax on luxury goods consumption or discourage their imports such as imported SUVs.

“The local auto industry is doing this big favour to the government and society despite facing many hardships and at a time reaching crisis points due to abrupt changes in the approaches and implementation of the bad policies by the government,” said. Usman Malik, Chairman PAAPAM.

“It is encouraging that Customs Department is not allowing the import of used cars on forged documents to stop the illegal activities of the dealer mafia which is boding well for the local auto industry as it resulted in reduction of used cars import and this should be carried on,” he added.

Usman Malik stated that PAAPAM has repeatedly requested the Government to rescind or at least review fixed duty & taxes rates in SRO 577, but still PAAPAM’s voice is unheard.

The rates fixed in US$ term in SRO 577 back in year 2005 are very low, thus giving an undue advantage to used car traders at the cost of local industry and resulting in significant loss of revenue to the Government that ranges from USD 4475 to 7337 on import of used cars. The used car dealers has made billions of rupees due to their influence in Government circles, and from misuse of import policy meant for Pakistanis living abroad, he claimed.

He said the importers of the used cars pay the duty and taxes of USD 4400 on 800cc, fixed in SRO 577, which is USD 11,392 under the normal regime. With the depreciation allowance of 36% duty & taxes on upto 800cc car under SRO 577 comes to USD 2816 as compared to duty & taxes under normal regime of USD 7291, therefore inflicting a loss of USD 4475 to national exchequer on import of every upto 800cc car. Similarly the government is losing USD 7337 on 1000cc, USD 6420 on 1300cc, USD 6879 on 1500cc, and USD 5653 on import of 1800cc used car.

The PSSPAM and PAMA leaders insisted that the government should protect and encourage local auto industry as it would give boost to the national economy.

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