In order to expand the revenue base, government imposed additional duties and taxes on the automobile sector which resulted in massive decline in car sales. Additionally government’s decision to curb used car imports from January 2019 onwards led to a plunge of 51% in overall imports of cars.
The government wanted to control foreign exchange outflows by restricting car imports; however that decision also backfired resulting in a tremendous loss of revenue. Considering this, the government as per information is considering to allow used car imports under new terms and conditions.
All Pakistan Motor Dealers Association Chairman H.M. Shahzad said the government should allow commercial imports of used cars if it believes that baggage, transfer of residence and gift schemes were being misused.
However local car manufacturers have warned the government that liberalization of the import of used vehicles will lead to closure of the auto industry and hit plans of setting up new vehicle plants in Pakistan.
A meeting on liberalizing car imports was held on Monday in which members of PAMA (Pakistan Automobile Manufacturers Association) were not invited. Director General PAMA Abdul Waheed Khan said:
“We are surprised what the meeting will discuss without us and without those who are frantically working to set up new car plants in the country – the new investors.”
In a letter addressed to the commerce secretary, Abdul Waheed Khan said the auto industry was quite saddened by the FBR’s move as the industry had already been suffering since April 2018 when the previous government imposed a ban on purchase of new vehicles by non-filers of tax returns.
Things since then have worsened with the imposition of additional taxes and duties on automobiles, coupled with massive depreciation of the rupee; all numbers have increased except for production and sales, which have gone down massively.
In the letter, PAMA specifically mentioned the meeting with the FBR chairman, who it said was totally opposed to the idea of liberalizing the import of used vehicles. “Ultimately, the policy won as no change took place.” The letter urged the government not to take any action which would lead to the shutdown of auto industry.
A final decision regarding the introduction of new import scheme is expected to be announced in near future.