Government of Pakistan curbed the imports of used cars through various measures from January 2019 onwards. The government wanted to control foreign exchange outflows by restricting car imports; however the decision backfired resulting in a tremendous loss of revenue.
More than 34,000 used cars were imported between July 2018 and January 2019. However only 1,800 cars had arrived from January 2019 onwards with most of them still stuck at the port waiting for clearance.
Lobbyists of used cars and local auto manufacturers are each pressuring the government to agree with their point of view. The existing regulations on imports of used vehicles suits local manufacturers, however this leaves consumers on the mercy of poorly made expensive cars without features and equipment. Imported cars, despite being used pose a great threat to the locally assembled vehicle because of modern fuel efficient engines, better features and safety and above all, better quality with more variety to choose from.
According to Dawn used car importers met Adviser to PM on Finance Abdul Hafeez Shaikh on August 26th seeking clearance of cars imported in violation of revised procedures. “We have asked the customs department to give us the actual number of cars at Karachi ports”, an official said.
He said that there are conflicting figures about the total number of cars held up at ports and after ascertaining the exact number, the ministry will look into the proposal whether to allow their clearance or not.
The change in auto import policy has led to a decline in customs’ revenue in the first month of current fiscal year. Further, clearance of vehicles stuck at the Karachi ports will generate one-time revenue for the Federal Board of Revenue (FBR).
Federation of Pakistan Chambers of Commerce and Industries President Daroo Khan Achakzai came in support of the clearance of used cars at ports. He said the move will not only generate additional revenue for the FBR but will also help release the cars held up at ports to importers.
While talking to Dawn, FPCCI President Achakzai came hard on the government for restricting imports of used cars. “I will urge PM Imran Khan to direct the concerned quarter to stop anti-business policies”, the president said.
Last year, the commerce ministry had made the procedures for import of three-year-old used cars stringent linking the conditions of bank details of importers for clearance at the country’s Karachi ports.
On the other hand, Pakistan Automotive Manufacturers Association Director General Abdul Waheed Khan sent a letter to commerce secretary on Aug 22nd to appreciate the ministry’s stance on the policy for used car imports and urged the government not to take any action which would lead to the shutdown of local auto industry.