The used car import facility under various schemes for Pakistanis living abroad has been misused by used car traders. Although this scheme is for overseas Pakistanis, however, the used car traders purchase the documents against a meager amount from overseas Pakistanis and indulge in mass imports.
These traders make huge profits ranging from Rs 50,000 to Rs 200,000 on the sales of these cars. The transactions are not transparent and without any contribution to the exchequer as no taxes are paid on the profits made by them. These imports are also damaging Pakistani economy as they result in drain of foreign exchange.
It is interesting to note that the foreign exchange consumed in import of used cars is twice that needed for CKD operation due to considerable localisation. Also the taxes paid at import stage are fixed amount in US dollar which were determined in year 2006; the yen and US dollar parity has since changed from 114 yen to a US dollar to 79 yen to a US dollar, whereas there is no change in fix taxes in US dollar.
Recently another scam of deliberately importing more than five years' old cars has been unearthed. These traders in violation of the rules are importing more than five years' old cars and getting them cleared through fowl means. It has also been noted that spare parts are also put in many imported cars. The penalty proposed by Ministry of Commerce will not hurt these unscrupulous traders as they will under invoice the vehicles more than five years' old and will continue to thrive. This will also entail a continuous import of more than five years' old vehicles. These traders should not be given any amnesty rather they should be taken to task for not abiding by the policy which is meant for overseas Pakistanis only.
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