Budget proposals: PAMA highlights impediments to auto sector growth

Wants under-invoicing and smuggling of imported cars curbed

LAHORE: Joining in on the bandwagon like the rest of the Pakistani industries, the auto sector has also prepared a comprehensive budget proposal for the Ministry of Finance. The Pakistan Automotive Manufacturers Association (Pama) has highlighted some of the impediments to growth and further investments, with a request to remove the tariff anomalies in the upcoming budget.

The prime focus of the proposal is on unfair advantages being given to used car importers causing damage on not only the local industry but the national exchequer as well.

“Under SRO 577(I)/2005, duties and taxes rates were fixed in dollars back in 2005 and, except once in 2008, were not appropriately revised , whereas, ever since the prices of used vehicles have increased substantially. The fixed duties under SRO 577 are substantially lower than the duties under the normal regime,” the proposal said.

“If the SRO cannot be abolished completely, it may be updated to bring the fixed amount of duty and taxes at par with reality of the time,” the proposal said while requesting that the SRO may be revised and updated in consultation with the industry.

The proposal also says that under S.R.O-. 499 (I)/2013, hybrid vehicles are allowed to be imported at a concessionary rate of duties and taxes in Complete Built-up Unit (CBU) condition only.

Pama proposes the existing concession to CBUs be likewise extended to imports of auto parts and CKD kits enabling local production of similar hybrid vehicles.

SRO 499(1)/2013 dated June 12, 2013 provide relief from custom duty, sales tax and income tax only on import of Hybrid Electric Vehicles. Local sale of these vehicles by a registered person is subject to sales tax at normal rate such as 17%.

“Under invoicing from China is now common knowledge,” Pama proposal said while suggesting fixing minimum duty on Chinese vehicles in consultation with local industry and the original equipment manufacturer operating in China. “This would provide a level playing field to the industry and increase government revenues,” the proposal added.

To promote localisation, increase revenue of the government and have fair competition, under-invoicing needs to be curbed strongly. The incorrect declaration of value by the unorganised sector results in unhealthy competition, added Pama.

Published in The Express Tribune, April 18^th, 2015.

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