Consumer interest overlooked in new auto policy

Government opposes import of used cars on a commercial basis to protect local assemblers

ISLAMABAD:

The much-awaited new automobile policy has overlooked the interest of consumers as the government again opposes the import of used cars on a commercial basis, protecting the vehicle assemblers who have been demanding higher prices with no significant addition of new technology.

In the proposed policy, the government has not brought about changes in the existing import rules for used cars and instead decided to plug the loopholes being exploited by the consumers under different import schemes, show official documents.



The Import Policy Order does not allow import of used cars by individuals and businesses. However, expatriate Pakistanis are permitted to bring vehicles up to three years old to Pakistan at reduced duties under the schemes of personal baggage, transfer of residence from abroad and gift to a family member.

Since there is a bar on car imports for personal use, the consumers are misusing these schemes as they find the imported vehicles of better quality than locally assembled cars.

Earlier, there were hopes that the government would allow the import of second hand cars on a commercial basis in a bid to provide consumers with a wider choice, who are forced to buy comparatively expensive locally assembled cars.

The Federal Board of Revenue had also backed the demand aimed at breaking the monopoly of existing auto players.

DESIGN: TALHA KHAN

However, the automobile policy that the Ministry of Industries and Production tabled in a meeting of the Economic Coordination Committee on Wednesday talked about limiting the import of used vehicles.

“The schemes, meant for specific segments of beneficiaries, have been turned into a free-for-all instrument of import with a serious impact on the local industry,” said the policy, suggesting that “these distortions” would be corrected.

According to the policy, the “age limit of three years to be continued in case of cars” and the Ministry of Commerce will define special operating procedures under the Import Policy Order to prevent the misuse of import schemes.

The Engineering Development Board (EDB), a state-owned body said to be looking after the interests of the car lobby, stated, “allowing commercial imports will discourage new investments in the automotive sector and will have a negative impact on existing players.”

It proposed that in case of imports, payment of duties by expatriate Pakistanis should only be accepted through banking channels in an attempt to discourage misuse of the schemes.

The Ministry of Commerce also backed the EDB and the Ministry of Industries, agreeing on the age limit of three years on the import of used cars and pickups.



Similarly, it agreed that trucks and buses may continue to be allowed with the age limit of five years.

According to the policy, the FBR will issue import duty rates for all types of vehicles in US dollars on June 30 of each year. Currently, import duties are fixed in US dollars for only up to 1,800cc vehicles of Asian make.

Duties for all other vehicles including the ones made in European and western countries are not fixed due to their huge range and variants.

Until 2011-12, the import of up to five-year-old cars was allowed. However, the Pakistan Peoples Party government reduced the age limit to three years.

In 2011-12, which was the last year for the five-year limit, 57,000 used cars were imported, suggesting consumer dissatisfaction with the kind of vehicles local assemblers were producing.

The number came down to only 29,000 units in fiscal year 2013-14 after the reduction in age limit.

Published in The Express Tribune, August 14^th, 2015.

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