KARACHI: Auto parts makers are disappointed by the government’s decision to clear over 10,000 used cars from the Karachi Port under the old procedure prevailing before Oct 6, 2017.

Former chairmen of Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam), Aamir Allawala and Munir K. Bana have said that the government had changed the decision in just four months in favour of used car importers.

The government had taken the decision in October 2017, under which duty and taxes would be paid out of foreign exchange arranged by recipients of cars, supported by bank encashment certificate showing conversion of foreign remittance to local currency for all vehicles, new and used, to be imported under transfer of residence, personal baggage and gift scheme.

The recent retraction on misuse of imported used cars policy would hurt the industry’s sentiments and gives a negative message to new entrants, they said.

One imported used car deprives the local vendor industry of Rs300,000, and only last year, around 80,000 cars were imported causing a loss of around Rs24 billion.

The former Paapam officials have asserted that the government should ensure predictable and transparent policies to motivate manufacturers to invest more to increase their capacity and attract new entrants.

Auto industry employs around 2.5m direct and indirect labour, and still has a lot more untapped potential, both at the utilisation front and production level, they added.

Allahwala said that increased input costs are putting immense pressure on the local auto industry, while regulatory duty (RD) on steel is playing a major role in rising production cost.

As a basic principle, RD is imposed only on imported products/raw materials that are available indigenously. Pakistan is not producing auto grade/tensile steel, still RD is imposed on its import, he lamented.

Chairman All Pakistan Motor Dealers Association (APMDA) H. M. Shahzad said that the government would get Rs12bn in terms of customs duty from clearance of these 10,000 vehicles. Around 80pc of the vehicles stranded at the Karachi Port since October are of 660-1,000cc engine strength, added Allahwala.

The local assemblers had recently raised their prices while their delivery time had swelled up to six months, followed by heavy premium.

He said the government’s decision would bring back competition among the used cars and locally produced cars which will prove unhealthy for the local automotive industry.

One the other hand, Chairman APMDA has said that the local industry is protesting against used car imports despite the fact that 660cc capacity cars are not being manufactured in Pakistan. He also urged the government to allow five-year old used cars ahead of the general elections to win support of masses.

The government’s decision of discouraging used car imports from October 2017 had actually made negative impact in the import figures of completely built-up units (CBU) during January, which dropped to $25.5m from $43m in December 2017. The imports in January 2017 were $47.7mn.

Despite the drop in imports in January, the overall import bill for CBU car imports swelled to $302m in July-Jan 2017-18 from $216m in the same period last fiscal, figures released by the Pakistan Bureau of Statistics revealed.

Published in Dawn, February 22nd, 2018