LAHORE, Oct 31: Import of new and old passenger cars, SUVs and pick-ups during the first quarter (July-Sept) of the current financial year has surged by about 26 per cent as compared to the corresponding period last year.
Some 2,654 passenger cars, SUVs and pick-ups have been imported in the first quarter of the current fiscal year. This compares to 2,001 new and old vehicles imported during the same period in the year 2004.
When matched with 1,337 passenger cars, SUVs and pick-ups imported during the first quarter of 2003-04, the import of vehicles in the first three months this year has almost doubled.
A closer look at the trend of imports during the first quarter of last three financial years amply indicates that the imported vehicles include a substantial number of the old ones. In 2003, 725 old vehicles were imported as compared to 612 new ones in the first three months.
In the same period during 2004, some 1,257 new units were imported compared to 744 old ones. During the current fiscal year, 1,169 old vehicles have been brought in the country as compared to 1,485 new units.
The surging automobile imports are said to be the direct outcome of drastic reduction in tariffs over the last five years. The customs duties on the import of new cars have been trimmed during the last five years by almost three times and by more than half in the last two years only. The current rate of import duties on cars up to 1,500cc is 50 per cent, on cars between 1,501-1,800cc it is 65 per cent and on those above 1,801cc 75 per cent.
The government has reduced the import duties with a view to bridging the gap between demand and supply of cars, but is stated by local assemblers to have a negative impact on the local manufacturing and inflow of direct investment in the future.
In addition to reducing duties, the rate of depreciation allowed on import of used cars has been increased from one per cent per month to two per cent per month on used cars below 1,800cc. “To this, if we add up to 50 per cent depreciation allowed by the customs authorities on the used cars imported under the baggage scheme, the landed price of the used cars reduces substantially,” says an executive of a local car company.
“Furthermore, the revised trade policy announced in July makes several changes in the Personal Baggage, Transfer of Residence and Gift Schemes (import of vehicles) Rules 2004, which have a negative bearing on the automobile industry. For example, cars up to three years old can be imported under the Gift and Personal Baggage Scheme as against two years old previously. Also, the clause for mandatory registration in the name of importer under the Transfer of Residence Scheme and Personal Baggage Scheme has also been abolished. Previously, under the Transfer of Residence Scheme a vehicle had to be registered in the name of the applicant for at least 365 days prior to departure for Pakistan.
Similarly, under the Personal Baggage Scheme the vehicle had to be registered in the name of the applicant for at least 60 days prior to departure for Pakistan. These changes have encouraged import of used cars,” he said while talking to Dawn on Monday.
In 2004-05 some 3,287 used vehicles were imported as compared to 1,042 in 2003-04. The number of new units imported in 2004-05 also shot up to 4,726 from a mere 1,552 in 2003-04. On a calendar year basis, compared to 2,325 new and old vehicles imported in 2004, some 5,108 new and old vehicles have been imported till September 2005, showing around 120 per cent increase. “This comparison is enough to indicate the impact of reduction in the customs duties as well changes in the automobile import policy of the government,” the executive said.
The local manufacturers say the absence of NTN certificate requirement for purchasing imported cars in Pakistan paves the way for under invoicing and fake documentation. “The Pakistan Revenue Automation Ltd (PRAL) data reveals that rampant under invoicing is being done by importers of used cars. In many cases, the value of the vehicle assessed by the customs authorities is more than thrice the value declared by the importers. This only substantiates the apprehensions voiced by car manufacturers that used car imports are not properly regulated and always lead to under-invoicing, procedural irregularities and loss of revenue to the government. Thus importers and buyers of imported cars are still exempt from documentation and tax net while all sales of locally manufactured cars are fully documented with NTN certificate,” they say.
