Used car restrictions

January 22, 2019


THE government has done the right thing by reviving the restrictions it had placed on the used car import business. And unlike previously, it needs to continue with the initiative rather than fold it up under pressure. In fact, what the used car importers are calling ‘curbs’ are actually measures designed to ensure that the import of a used car under the gift or baggage scheme is not being misused for commercial purposes. The law allows all Pakistanis to import a used car if they are returning from employment abroad or receiving it as a gift from a relative who lives outside the country. But importers have greatly misused this facility to commercially import used cars for onward sale instead. Almost all used cars being imported into the country are brought under these schemes.

All that the government has done through a recent order issued by the commerce ministry is to require that the funds remitted to pay for the reduced import duties applicable under the gift and baggage scheme be made via an account that is opened in the name of the person bringing the vehicle, or a family member. If used car importers are complaining about this, it only shows that they have been using the schemes in question for commercial purposes. If they want the right to import used cars on reduced duty for commercial purposes, they should lobby the government specifically for this rather than demand that they be allowed to continue to take advantage of a facility meant for overseas Pakistanis. The used car racket needs to be stopped. In the name of their commercial interests, these racketeers are not only misusing a customs scheme, but also remitting their payments abroad through illegal hundi and hawala channels, and thereby draining the country’s foreign exchange reserves. There are also no real quality checks on the vehicles being imported by them, which in many cases are automobiles picked up from junkyards in the country where they are procured from. All along the chain, this racket does damage to Pakistan’s economy. It deceives the consumers into thinking that they are buying a ‘reconditioned’ vehicle; it strengthens illegal hundi and hawala networks; it warps and misuses the regime of customs duties meant for others; and it deprives the exchequer of its revenue and drains foreign exchange from the economy. It is high time the racketeers were made to adhere to the law.

Published in Dawn, January 22nd, 2019