Smuggled cars: Auto industry suffering aftershocks of imports

Industry members want govt to impound smuggled cars.

LAHORE:

Chairman Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam), Munir Bana, said that the lobby of used car importers, who made billions of rupees by misusing import policy in the past, are making all-out efforts to misguide the new government again, while  the country’s automotive industry and auto parts manufacturers are still suffering from the aftershocks of inconsistent import policies, rampant import of used cars and frequent amnesty schemes in the previous government.

Because of these reasons the domestic industry witnessed a huge decline of 25% in sales of locally manufactured cars from 157,325 units in 2011-12 to 118,830 units in 2012-13, leading to a drastic fall in sales of auto parts in the country, said Bana.

He said that the present import policy continues to pose a threat to the local auto industry because, while import of used cars is restricted to three years, all other vehicles such as Vans, SUVs and 4x4s, up to five years old are allowed to be imported under the current laws.

“Import cost of three-year old used cars is also attractive because of lower duty rates fixed as far back as 2005, based on currency rates and car prices prevailing in the year 2005. Since 2005, the parity of currencies as well as the cost of vehicles have risen significantly, but the duty rates fixed in dollar terms in 2005 remain unchanged”, he added.

The industry representatives have time and again expressed their concerns to the Federal Bureau of Revenue (FBR) to review the duty rates fixed in SRO 577, but despite consensus, no action has been taken so far, said Bana.

“In a landmark judgment in July 2013, the Amnesty Scheme for smuggled vehicles was deemed illegal by the Islamabad High Court (IHC) and was ordered to be reverted back to its pre-SRO position. No action has been taken by the government in this regard so far, and a huge amount of smuggled vehicles are still available in the market” said Paapam chairman.

Bana recalled that that the IHC had declared the amnesty scheme by the FBR illegal and ordered them to impound over 50,000 vehicles. The court, encouraging honest taxpayers and supporting the local industry, had directed the FBR to announce bids for the vehicles after impounding them for auction.

Published in The Express Tribune, September 5^th, 2013.

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