Keeping in view the demand of and subsequent sharp rise in prices of vehicles, All Pakistan Motor Dealers Association (APMDA) has demanded the government to allow import of used cars commercially.
In a budget proposal sent to the ministry of finance and others institutions concerned, APMDA on Monday has claimed that a sharp increase in the price of vehicles has been recorded during the last couple of years, following improvements in law and order situation and development activities in the country. However, the assemblers of cars have failed to meet the rising demand in the market. Amidst the high demand and unavailability of new cars in the market, local assemblers have acquired a monopoly on prices and supply, and the freedom of choice of the consumers is severely restricted.
The budget 2017-2018 proposals, copies of which are available with Pakistan Today, say in the years 2005-2006, the import of used vehicles was permitted after a long gap of 12 years.
The importers of used cars have proposed the government to allow commercial imports of used vehicles of up to 5 years. Allowing commercial imports, in addition to existing schemes for the import of used vehicles like Transfer of Residence Scheme, Gift Scheme and Baggage Scheme, would be in line with the government’s policy of the documentation of the economy and would generate 100pc more revenue for the government. It would also bring the import of used vehicles’ business into the tax net and will help the government expand its tax base. We suggest that only the certified members of APMDA should be allowed to import the used vehicles on a commercial basis for the sake of transparency of the trade.
According to the proposals, the existing schemes for the imports of used vehicles are for the facilitation of overseas Pakistanis. It is recommended that in these schemes there should be no restriction of age limit for the import of vehicle.
The importers of used cars opine that local assemblers are enjoying the monopolistic and consumer unfriendly benefits of restrictions on used vehicles’ import for the last many years. It is important to note that there has been no increase in their production or any reduction in their price. They continue to fleece common people in the shape of 100pc advance payment at the time of booking of a car, and the delivery of a car takes three months to six months! As a result of delays in car delivery, the black marketer charges a hefty premium from innocent people. They arbitrarily increase the price of their cars as and when they desire, resulting in a significantly greater financial burden for the common man and profits for the auto assemblers.
The promised levels of deletions have also not been achieved, despite the passage of many years. It is also pointed out that in the present government’s tenure, the exchange rate of Japanese yen depreciated almost 40pc but the local assemblers have not given this benefit to the consumers in the shape of a price reduction.
It says that regulatory duty income decline has led to a huge revenue loss, which is verifiable from all the Collectorates of Customs. The issuance of notification C.G.O. 01/09 dated 13-01-2009 has deprived the legal, social and ethical right to obtain the depreciation @2pc per month on old and used vehicles of above 1800cc imported by overseas Pakistanis. This facility was available for the last 30 years, before it was abruptly withdrawn. As per current S.R.O. the depreciation of the taxes and import value of used vehicle is @ 1pc per month. The importers are already paying a high tariff rate on account of Regulatory Duty, 60pc on the vehicles of above 1800cc (Cars and Jeeps) and devaluation of currency. For the record, it is important to note that the local assemblers are not assembling cars of above 1800cc. The imports of 1800cc cars and jeeps would not affect the local auto assemblers, as they are charging an unfair profit on their smaller capacity vehicles.
According to used car importers, the Amnesty scheme of March 2013 had resulted in regularising 52000 smuggled vehicles of various engine capacities without any restriction of its age limit.
The simplification of the import procedure of used vehicles of all engine capacities and the fixation of duty for all used vehicles would also help the government to enhance its tax base.
