LAST October, the government tried to take a decisive step to prevent the abuse of a scheme that allows nonresident Pakistanis to bring their car back at reduced duty and tax rates when returning to their homeland. The scheme was being utilised by importers of used cars to import vehicles into the country for onward sale to clients. The new rules announced by the commerce ministry to clamp down on this abuse required all duties and taxes on cars imported under the scheme to be paid through a bank account in the name of the person who was returning. The slight modification instantly meant used car importers could no longer take advantage of the scheme to clear the cars they were importing for commercial purposes, and somewhere around 10,000 vehicles were left stranded at the port while further imports of used cars ground to a halt. The noise made by the importers was the clearest proof that the government had correctly identified abuse of the scheme. Sadly though, by early this month, the government caved in to pressure from the used car importer lobby and reversed its decision. The stranded cars are now set to be cleared, while fresh imports are also ready to begin.

Import of used cars is not something that should necessarily be opposed, but allowing the practice to run through rackets and abuse of import schemes is no way to conduct policy. If the government feels that used car importers deserve duty and tax incentive, it should be made part of a policy framework, rather than tacitly allowing the abuse of a scheme meant for returning expatriates. Otherwise, the government will have no control over these imports, which in large numbers do, indeed, threaten the local auto sector. But in each case, wilfully turning a blind eye to the abuse of special schemes and incentives cannot be the answer. The way in which the government took back its decision of early October smacks of weakness and bowing before special interests, some of whom are in parliament. It would have been better if the cabinet had searched for a formal policy path that would allow used car importers to continue their business, rather than reopening a back door for them to bring their wares into the country. The decision is tantamount to endorsing the rackets that riddle our imports, and signals government weakness.

Published in Dawn, February 26th, 2018