KARACHI, June 22: The cut in import duty on cars by 20-50 per cent has failed to inject any enthusiasm among car dealers to go for import as they feel that the decision is a mere eye wash.

Car dealers termed the import duty cut as an step to just change the behaviour of the local assemblers instead of encouraging car imports.

“There is no hustle and bustle among dealers after the budget as they are reluctant to avail of the benefit,” the chairman, All Karachi Motor Dealers Association (APMDA), H.M Shahzad said.

Similar views are also offered by other dealers located in various areas of the city, saying the import of cars on new duty structures is not ‘feasible’.

Finance Minister Shaukat Aziz in his budget speech on June 15 said that the import duties on cars are extremely high and there is no import of vehicles. Market lacks any competition, tempting local assemblers to be costly and less quality conscious, thus jeopardising the legitimate interest of consumers. He said the duties were being reduced to create an environment of efficiency and competition.

Shahzad said that the statement of the finance minister would have been proved fruitful if the import duties were reduced by 50 per cent. Under the current duty structure, the situation is almost same as of pre-budget.

He said dealers are now waiting for the new trade policy 2002- 2003, hoping that the government would again review the import duty rates and bring down them further so that consumers could avail real benefits.

He said the depreciation facility is also not available on the import of used cars below 1,800cc. Depreciation on import of used cars should be reinstated. Besides, the terms and conditions to import used cars under personal baggage, gift and transfer of residence schemes have been made extremely difficult to be met to block the import of cars.

In a letter to finance minister Shaukat Aziz, on June 22, he said the restriction on the import of used cars of more than two years old should be abolished under personal baggage and gift scheme. The compulsion of registration period under transfer of residence rule should also brought in line with the personal baggage and gift scheme.

A car clearing agent and ex-secretary Karachi Customs Agents Group (KCAG), Tahir Mehmood Shaikh said all the governments in developed countries including Japan and the US have allowed import of cars in order to create a competition as well as offering various choices for its consumers to own a car.

In Pakistan local assemblers have been provided with an open field to make fortune since the ban imposed on used cars in February 1994 under the blessings of government, thus making impossible for the medium class people to think of buying a car. “The industries should not be set up on cost of assumption. There should be a competition and free environment for buyers to select products,” he said.

General Secretary, All Karachi Motor Dealers Association (AKMDA), New M.A. Jinnah Road Zone, Masroor Ahmed Siddiqui said if an Alto 800cc is imported as per new duty structure, it will cost Rs650,000-700,000. A 1000cc car, which is locally priced at Rs550,000, will cost Rs800,000 if it is imported.

Chairman of same zone of AKMDA, Ejaz Ahmed said the government has just shown its teeth to the assemblers in a sweet manner instead of providing any relief to car buyers.

“If all items like domestic appliances, TV and other costly items can land into Pakistan despite local assembly of these items, then why imported cars cannot be allowed to create a healthy competition,” he said.

People can afford used cars at cheaper prices as compared to locally produced cars, if import duties are reduced by at least 50 per cent, he added.

On the other hand, local assemblers of cars resent the government’s decision to cut down the import duty on cars, saying it will give a serious setback to the progressive manufacturers of vehicles in the country.

They feel that the cut in duty will discourage the foreign investors besides hitting more than 500 parts makers who employ more than 100,000 people.

They urged the government to continue maintaining the existing rates of the customs duty and other taxes on the locally manufactured and built up vehicles for at least three more years to enable the industry to grow.