IMC urges govt to curb used car imports

CEO calls for tax restrictions on imports to revitalise sector, bolster revenue by Rs80b

ISLAMABAD:

Indus Motor Company (IMC)’s Chief Executive Ali Asghar Jamali has presented budget proposals to the government, advocating for restrictions on used car imports to boost revenue collection by up to Rs80 billion.

Jamali stressed that the removal of regulatory duties on imported used cars had led to an influx of imports, adversely affecting the local auto industry.

In a briefing with journalists on Thursday, Jamali disclosed that he had met with the finance minister and Federal Board of Revenue (FBR) officials, proposing measures to curb used car imports, potentially increasing revenue from Rs70 to Rs80 billion.

He underscored the urgent need for remedial actions in the upcoming budget to fortify the local auto industry and rejuvenate investor confidence.

Having engaged with key government stakeholders including the finance minister, industries minister, and FBR chairman, Jamali highlighted the industry’s plea for heightened duties and taxes on used cars in the forthcoming budget to safeguard the local auto sector.

This move is deemed crucial to bolster the local auto industry amidst signs of improved economic activity, currency stability, and prospects for interest rate cuts.

“Despite expectations of a demand surge from January 2024 onwards, the current year has seen no respite for Pakistan’s auto industry due to the influx of used car imports,” observed Jamali.

While local automakers witnessed a modest 28% sales increase in February 2024 compared to the previous year, used car imports skyrocketed by over 711% during the same period.

Expressing concern, Jamali warned that if this trend persists, the vendor industry could face closure, given the unsustainable business environment and low plant utilisation capacity.

He highlighted the local auto industry’s significant contributions, with investments of approximately $2.5 billion, Rs400 billion in taxes in FY2022, and the creation of around 2.5 million direct and indirect jobs.

The surge in used car imports, averaging 3,068 vehicles per month from July 2023 to April 2024, has severely impacted local businesses, potentially leading to unemployment and tax revenue losses.

Jamali also raised concerns about illegal financial channels used for foreign payments related to used car imports, urging the government to rationalise import taxes and ensure imports are solely for overseas Pakistani families’ use.

Responding to queries, he estimated that integrating the industry’s proposals into the budget could boost FBR revenue by Rs80 billion. Regarding exports, Jamali highlighted Toyota’s plans to export vehicles to Africa from July 2024, urging expedited Free Trade Agreements (FTAs) with African countries to facilitate car exports.

Published in The Express Tribune, May 24^th, 2024.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.