KARACHI: In a move that has shaken the imported car industry, the government of Pakistan has given motor car dealers an arduous task to pay duties in dollars on importing cars.
In an effort to give life support to ailing foreign exchange reserves, the government is apparently working to reduce extravagance in spending of foreign exchange. In one of such efforts, the government is now binding car importers to pay duty bill in dollars. Its immediate impact will be an increase in prices of cars, which have recently made their way into showrooms. If the issue lingers then consumers will be left with lesser options while buying a car.
All-Pakistan Motor Dealers Association (APMDA) Chairman HM Shahzad, who has recently met Commerce Secretary and other government officials, has said no one has the formula to introduce forthcoming dollar duty provision.
In a WhatsApp message to all dealers, HM Shahzad said that government officials have asked them to give their feedback how the government could receive duty on imported cars in dollars.
According to Shahzad, the government and Ministry of Commerce have said that they have not stopped any work but they want to receive duty in dollars. “They want to devise a formula, where they could receive duty in dollars.”
Shahzad said he has told the ministry officials that there are around 15000 to 17000 cars in transit either at Japan seaport and are in the pipeline to reach to Pakistan. “I have requested them to give us time for it.”
APMDA has also sent a short proposal to Ministry of Commerce after the meeting requesting them for deferment of the new dollar-duty provision till December 31 so that cars in the pipeline could be cleared.
“The officials have agreed with us on this and have given us time till December 31. But they have requested us that we pay this duty in dollars,” he said.
He added that he had told them that no one including FBR, Customs, NBP or State Bank has such formula for payment of duty in dollars.
“So, I have told them that they have to actually devise a formula where they can receive duty in dollars. I have told them if our clearing agent will go with dollars then how can National Bank receive it since they do not have the powers,” he said.
He also said that overall the meeting was fruitful with the Commerce Secretary in Islamabad and hopefully things will get better.
In the meantime, APDMA and government agencies, the ministry of commerce, the ministry of finance, State Bank and FBR should work together to devise a suitable mechanism for payment of duties in dollars.
Shah Global Motors CEO Shah Muhammad Shah heavily criticised the government for duty to be paid in dollars on the import of Japanese cars.
“The government is helping local car manufacturers by erecting this new regulation while hurting huge used car industry in the country. Thousands of workers involved in this industry will be out of work. According to my estimation, 90 per cent Pakistanis in Japan will have to return since the main source of their income comes from working in this industry,” said Shah.
Shah added “the government should encourage exports if it wants to earn or maintain foreign exchange reserves. It should do skill counselling, give a tax rebate to exporters and organise exhibitions like they did at IDEAS regarding weapons. But the government is seeking an easy way out and punishing us for it.”
“First the government let this industry flourish and now they are burdening this industry so much that it will not be able to survive. Either it was illegal when the government let this industry start and flourish or it is illegal now. In both cases the culprit is the government,” he said.