The used car imports in Pakistan is on the rise for the last few years, the year 2017 has witnessed 65% growth in the imports of used vehicles from 46,500 units imported in 2016 to 76,635 units imported in 2017. According to a report, the major factors contributed to these imports includes low-interest rates, increase in auto financing and ride haling services like Careem and Uber boosted the used vehicle imports.
But the government’s policy on importing used cars has created confusion in the local market, thousands of cars are stuck at the ports waiting to be cleared from customs. A Parliamentary committee on Monday has taken a notice of the government’s current policy.
The Senate Standing Committee on Finance and Revenue has called the officials of Ministry of Finance, Ministry of Commerce and Federal Board of Revenue (FBR) to provide their opinion on the government’s current policy of importing used cars in the next scheduled meeting.
The Federal Government has recently changed the policy on importing 3 years old used cars with the previous policy on demand of importers. The Policy is unclear and doubtful for many stakeholders, due to the new policy the prices of locally assembled cars has been increased besides this more than 9000 imported cars are stuck at different ports, said the committee chairman. Moreover, the common consumer and traders are suffering from the unclear policy, neither ministry of commerce nor FBR has given a clear stance on the current government policy on imported cars, he added. He also blamed the government creating uncertainty in the market and hurting all the stakeholders.
However, the government has revised the policy on used imported cars twice in the last four months, in October government implemented a new procedure under which the cars imported comes “under personal baggage, transfer of residence or gift scheme, there were also restrictions on the payment, remittances, duties, and taxes which should originate from the bank account of Pakistan’s national shipping vehicle from abroad. Additionally, the ministry of commerce said the duties and taxes on imported vehicles under the scheme would be paid in foreign exchange arranged by Pakistani nationals or local supported bank with encashment certificate showing the local currency conversion. The goal of this policy was to curb the car imports and misuse of the schemes.
However, the auto industry is opposing the government policy saying it would hurt the car traders, local consumers as well as the economy. The Economic Coordination Committee (ECC) has decided to revert the current practice in early February, the current mechanism of importing used cars would apply the previous procedure of importing cars which was in place before October 2017.
The ECC has also directed commerce division to review the current situation and send their summary and recommendation for consideration.