WHILE the consumers may be happy to get cheaper imported second-hand cars, automobile manufacturers and vendors say they are facing tough time with the falling sales of locally-assembled vehicles. The domestic market now offers more choices to consumers, often forced to pay premium on early delivery of cars booked.

However, some consumers saw the market rigged and felt they were victims of cartelisation. There may be some truth in what the consumers believe.

The industry’s may not be globally competitive as some well-placed people in the government assert. That may have led to liberalisation of imports of second-hand cars.

It cannot be denied that the consumer —- the most important stakeholder who keeps the wheels of automobile industry running —- needs a fair deal. In a way, the automobile industry can be partially blamed for its own current plight.

But there are other consequences and implications of the liberalised imports of second -hand cars. The government’s decision has come at a time of sluggish economic growth, marked by a very long and still continuing spell of overall deindustrialisation.

Over the past decade or more, the pre-capitalist mercantalism has returned in the garb of international trade and globalisation.

Pakistan’s surging imports continue to outstrip exports by a wide margin, putting pressure on the exchange rate, resulting in increased cost of imported raw materials/inputs for industry, making import-oriented industry globally uncompetitive. It is also forgotten by policymakers that whereas industry provides employment, promotes self-reliance and creates national wealth, imports make a negative contribution to the GDP.

The auto industry claims that their sales have sharply declined with increase in imports of second- hand cars.

And the government has suffered revenue loss in excess of Rs14 billion over the last 12 months because of partial exemptions in duties and taxes on second hand car imports.. And the vendor industry has lost Rs20 billion in potential sales. At least one automobile unit has slashed its production.

In an country in which capital goods are imported and the engineering industry has not developed to its full potential, the automobile/vendor industry is paving the way for development of the capital goods industry.

The liberalised imports of second-cars would retard that process.

Because of the persisting global financial crisis, recession in Europe and fragile recovery in most of the industrialised world, most developing countries are focusing on domestic market and import substitution.

Policymakers in Pakistan are encouraging imports at the time when the rupee is under severe pressure while the external sector is vulnerable to international market volatility.—S. Nayab