Used car importers have urged the government to commercialize the import of used vehicles, which as they say will enhance choices for customers and generate revenue for the government in the form of duty.
In Pakistan, used cars are imported under three schemes which are; transfer of residence scheme, gift scheme, and personal baggage scheme. The import of used cars sharply declined by 39% during the first eight months of current fiscal year as the government imposed measures on preventing misuse of the allowed schemes. Government also introduced a new policy according to which importer of the vehicle would be liable to pay the duty in dollars.
Reportedly, during the first half of the current fiscal year, the value of imported used vehicles plunged to 43.6% at $156 million against $277 million recorded in the same period of the previous fiscal year.
According to Chairman APMDA (All Pakistan Motor Dealers Association) HM Shahzad, majority of used cars in Pakistan come from Japan and they offer better features than locally assembled ones. According to HM Shahzad, about 90% used cars have small engine capacities ranging between 660cc to 1000cc.
He further added that two year ago, the importers of old cars paid 91-225% in duty, which the government has now hiked even further. All the three schemes have the same duty structure, which grow as the engine capacity of the car increases.
However, the import of used cars is also blamed for pressure on the country’s meager foreign exchange reserves. Furthermore it also hurts the investment in the automobile sector and rattles the confidence of new players which are in process of launching their products in the market.