'Illegal' import of used cars may go on

The federal government is likely to continue with the prevalent mechanism allowing used vehicles import 'illegally' until new assembling plants are operational to meet domestic demand, well-informed sources told Business Recorder.
This understanding evolved at the Commerce Ministry after the stakeholders who met on Monday failed to agree on the future line of action about the import of used cars which are being imported under three schemes of Commerce Ministry, ie, Personal Baggage, Transfer of Residence and Gift Schemes.
Presided over by Commerce Secretary Younus Dagha, the meeting was attended by the officials of Commerce Division, Ministry of Industries and Production, State Bank of Pakistan (SBP), Federal Board of Revenue (FBR) and other stakeholders including used cars' importers.
The three schemes are meant for Overseas Pakistanis but commercial importers misuse them by buying the use of passports from expatriates at a rate of Rs 5,000 to Rs 50,000 per passport.
"Only five percent expatriates' benefit from these schemes while 95 percent vehicles are being imported by commercial importers across Pakistan," said an official on condition of anonymity.
The State Bank of Pakistan, sources said, maintains that used vehicles are being imported through "Hundi" which is illegal. For all vehicles in new/used condition to be imported under transfer of residence, personal baggage or under gift scheme, the duty and taxes are to be paid out of foreign exchange arranged by Pakistan nationals themselves or local recipient supported by bank encashment certificate showing conversion of foreign remittance to local currency.
Federal Board of Revenue (FBR) supported import of used cars to continue as per existing mechanism as it contributes substantial revenue to the national kitty.
The used car importers suggested that the government should open commercial import of used cars so that consumers may be able to buy cars of their choice.
Ministry of Industries and production and Engineering Development Board opposed import of used vehicles as this policy is hurting existing auto industry and new investment in this field. Ministry of Industries has already granted Greenfield status to eight parties, two of which are Korean brands.
Some of the officials argue that if used car import is banned immediately, the local assemblers will increase price and start charging "on money" as current production cannot meet domestic requirements.
"Commerce Ministry may recommend continuation of existing mechanism for import of used cars for another year, and till that time new production will also be available in the market," the official added.
Commerce Division, sources said, will send a summary to the Economic Coordination Committee (ECC) of the Cabinet after finalizing recommendations in an in-house meeting within a couple of days.
ECC changed its decision of October 22, 2017 on a summary sent by Commerce Ministry on a letter written by the Prime Minister's Advisor on Finance (now Finance Minister) Dr Miftah Ismail.