KARACHI: Used car dealers have urged the government to allow the commercial imports of cars up to 10 years old and SUVs up to 20 years, saying this would help the government earn handsome revenues and enable consumers to buy vehicles at affordable prices.

Recommending different proposals for used vehicle imports, All Pakistan Car Dealers and Importers Association (APCDIA) Chairman Mian Shoaib Ahmed said another way is to allow a restrictive $800 million imports mix per annum of different types of used vehicles through banking channels by reforming import policies and tariff structure.

He said this step would help eliminate the outflow of foreign exchange through the kerb market and promote a documented economy by channelising all transactions through the banking system.

It will also promote tax culture, as all importers would be bound to submit their imports and sales tax to the Federal Board of Revenue (FBR) to ensure transparency.

Dealers association laments overprotection of local assemblers

He said duties and taxes should be levied based on the depreciated invoice value of the imported vehicles. The depreciation allowance per month should be 2pc of the Import Trade Price (ITP) value of the vehicle. It should start from the month and year of the vehicle’s last registration, and a maximum of 60pc should be permissible.

Mr Shoaib said the government would have full control over import data to monitor foreign exchange outflows and tax and duty inflows.

He said the overprotection of local car assemblers had not let them grow, and they relied heavily on heavy government incentives, which did not serve the purpose of providing cheaper vehicles to consumers in the last three decades.

He added that less protection would compel the local assemblers to introduce new technologies and vehicles and promote localisation of parts to lower their production costs and make high-standard, fuel-efficient vehicles.

He said local assemblers were given numerous incentives and benefits to set up their plants to manufacture vehicles. Instead of localising, the assemblers are still importing most of the costly parts and buying low-value parts from local vendors.

Mr Shoaib said local assemblers spent over $5 billion on parts imports from 2020 to 2023. The Japanese companies invested in plant and machinery brought into Pakistan without paying a single penny of import duty, and the value of plant and machinery, as reported in the assemblers’ accounts, is highly questionable.

Besides repatriating huge profits in the form of dividends, none of the companies adhered to the deletion programme, which includes indigenous production of all the components of cars in Pakistan. The assemblers have also not complied with the condition of technology transfer, and they have been still importing semi- and completely knocked kits for the last five decades, he said, adding that the three main Japanese assemblers have failed to achieve the status of the manufacturer and are unable to export vehicles.

Published in Dawn, April 14th, 2024