Some 70,000 cars are imported into Pakistan every year, a
report by All Pakistan Motor Dealers Association (APMDA) suggests. This number
was much lower in 2016 while in the previous decade, not more than a few
thousands of vehicles could enter into the country.
What is the reason behind this number getting increased
every year and why Pakistanis are such big fans of imported Japanese cars?
Of course, it is the superior quality, comfort, and safety
feature Japanese cars offer as compared to locally manufactured vehicles. But unfortunately, the burgeoning number
might come down drastically in the coming years since the government has
announced a new Import Policy, which has created chaos among the car lovers,
buyers, and dealers.
The SRO No.52 (I)/2019 issued by the commerce division has
been translated by many blogs, channels, and newspapers as a ban on the import
of foreign cars into Pakistan. Yes, technically the import would fall
drastically but there is something more about this SRO that needs attention.
Let me try to make it simpler to understand what this new
import policy about imported Japanese cars is all about?
New Amendment in Auto
Import Policy
According to the new policy, it is mandatory to pay the
customs duty and other taxes through the foreign exchange which should be
endorsed by Bank encasement certificate. That means;
·
You will be liable to give a money trail.
·
You won’t be able to pay the duties and taxes
from money earned in Pakistan, and you have to arrange all taxes through
foreign exchange earned outside the country.
It is worth noting here that a similar SRO was issued in
2017 which was challenged in the Sindh High Court in favor of the dealers of
Japanese imported cars. Eventually, the govt had to reverse it.
Why was this policy
designed?
This car import policy was never designed for commercial
purposes, and the government never encouraged business people to open
dealerships and start selling imported Japanese cars in Pakistan.
The policy was actually meant to facilitate overseas
Pakistanis under Personal Baggage, Transfer of Residence and Gift Schemes.
Personal Baggage
Any Pakistani national living abroad for a minimum of 180
days is eligible to use this scheme to avail imported Japanese cars or any
other car from a foreign market.
Transfer of Residence
This scheme is just for government employees who are
stationed on govt duty outside Pakistan and have completed a minimum of 700
days abroad.
Gift scheme
Any overseas Pakistani can gift a car to his/her family
which includes parents, sister, brother, husband, wife, and children above 18,
whether married or not.
He/She must be having a minimum of 700 days outside
Pakistan.
Contrary to the popular myth, gifted cars are not exempted
from excise duty and customs.
Remember that you can avail any of the above schemes on a
single passport, once in two years only.
Dealers misusing the
schemes
The impact on the business of imported Japanese cars will be
damaging. Now, dealers will have to go an extra mile by arranging the expense
and duty of the vehicles from outside Pakistan. This will put them under the
radar of FBR since they need to provide money trails.
Earlier, dealers used to import multiple cars on the same
passport, and some were even found using fake passport copies due to lack of a
proper check on them. FBR and Customs collected the duties related to imported
cars by just reviewing the logbook of the vehicle. However, after this new
amendment importer will provide the passport copy of the sender and the
document of money sent by him which will make sure the import of only one car
on a single passport in two years.
“There is no mechanism to import used cars in Pakistan other
than utilizing these schemes. I know the scheme was not meant for dealers,
however, we are in this business and generating revenue for the government,”
commented an auto dealer at Maulana Shaukat Ali Road, Lahore.
“The government should allow import of used cars in Pakistan
by formulating new laws; otherwise, people will be left with poor quality and
no value for money local cars,” He added.
What Government is cooking?
Frankly, the above schemes were never designed to facilitate
the business of imported used/reconditioned cars in Pakistan, although, it was
practiced right under the nose of policymakers and the government earned huge
tax money.
The new policy document does not mention any ban on the
scheme; however, it appears to document the entire import activity through
proper banking channel for keeping an eye on the money trail.
Although the payment procedure of duties and taxes is
cumbersome, it seems to make sure that no substantial amount of dollars go
outside the country which national kitty needs the most at the moment. However,
the cost of might be higher, it will lose billions of taxes and duties it used
to collect.
Final Thought
The new amendment is welcoming. Its the extension of the
government’s policy to expand FBR’s tax radar which also includes the earlier
ban on non-filers to buy cars in Pakistan.
It will not only boost the local auto industry but will also
entice more new manufacturers to install their assembly lines here. Which, in
turn, will result in a variety of cars at competitive prices.
Moreover, Pakistan will be having a transfer of technology,
employment opportunities for citizens and even will be able to export cars.
There is no fun driving used/reconditioned cars while the world moves to better
technology and improved cars. We don’t want Pakistan to be a dumpsite of old,
reconditioned cars.
Having said that, there are some steps that the government
need to take immediately. They have to regulate the prices of the vehicles and
pursue local manufacturers to sell cars in a justified price range. The
government should devise a proper mechanism to regulate the quality and safety
standards of locally assembled vehicles.
Furthermore, the government should take the auto industry
seriously and invite a maximum number of auto manufacturers in Pakistan by
offering them incentives
