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  • Mar 29th, 2018
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Federal Board of Revenue (FBR) and Commerce Division have reportedly accused Engineering Development Board (EDB) of not taking measures to discourage automakers'' cartelization; well-informed sources in EDB told Business Recorder.

The Board which is headed by an ineligible acting CEO faced such a situation at a recent inter-ministerial meeting convened by Secretary Commerce Younus Dagha.

"Both Secretary Commerce and Chairman FBR emphasized upon MoI&P and EDB to discourage the cartelization of local car manufacturers in order to safeguard the interests of consumers by guaranteeing quality products at competitive rates, in a timely manner, and the premium charged on delivery of new vehicles to be discontinued," the sources added.

Chairman Federal Board of Revenue (FBR) Tariq Mahmood Pasha also expressed his anger at local assemblers for making "low quality" cars and "unilaterally spiking" the price, well-informed sources in FBR told Business Recorder.

These comments came from Chairman FBR at a post-ECC decision on enforcement of new requirements on import of vehicles under SRO 1067(1)/2017. There was intense speculation that importers spent millions of rupees to have their 10,000 three-year used vehicles cleared.

The ECC headed by Prime Minister had directed Commerce Division to rationalize import policy for used vehicles and ensure that it is used by the bona-fide beneficiaries and not misused especially by commercial importers.

The sources said, Chairman, Federal Board of Revenue (FBR) stated that there was high demand of vehicles in Pakistan and Original Equipment Manufacturers (OEMs) / Auto Assemblers did not have the capacity to meet demand thus people resorted to imported/ used vehicles. He criticized the OEMs that after implementation of SRO 1067(1)/2017, they had unilaterally spiked the price of locally assembled vehicles and additionally had stopped taking fresh bookings.

He argued that the quality of their vehicles is not at par with international standards.

Secretary Commerce, source said, maintained that OEMs were exploiting shortage of vehicles in the country and Ministry of Industry & Production (MoI&P) was not fully regulating the automobile sector to address the concerns of the consumers.

Member Customs of FBR proposed that either Government may commercially allow import of used vehicles keeping in view demand and supply position in the country; or, as the ECC had decided to revert to earlier system, the State Bank of Pakistan (SBP) ensures swift message with encashment by the family member, clearing agent or commercial importer to ensure remittance of foreign exchange while importing the vehicle.

The sources said, SBP disagreed with the suggestion of swift message and opined that it should only be used by the family members and not their agent(s) or commercial importers.

Chairman FBR stressed the fact that SBP may come up with a mechanism to ensure that duties and taxes are paid in foreign exchange by overseas Pakistanis as laid down in the Import Policy 2016, and any such proposals would be considered for the budget proposals for FY 2018-19.

The delegation from MoI&P and Engineering Development Board (EDB) comprising a senior official and acting CEO EDB along with an aide highlighted the important features of Auto Development Policy (ADP) 2016-21 which permits only import of not more than three year old cars by overseas Pakistanis.

The ADP encourages the investment in the automobile sector of Pakistan to promote employment and development of local vendors'' auto parts manufacturers. Representative of EDB stated that currently six new car manufactures/investors have registered with EDB - nine are in pipeline and some of the investors are seeking funding from International Cooperation Fund (IFC).

He stressed the fact that lack of implementation of ADP 2016-21 could shake the confidence of investors in automobile sector. MoI&P disagreed with the proposals of FBR to allow commercial import of vehicles.

The representative of Ministry of Overseas Pakistanis supported the measures taken by Commerce Division vide SRO 1067(I)/2017 of October 20, 2017. However, he emphasized that SBP may develop a criteria to avoid any inconvenience faced by overseas Pakistanis for remittance of duties/taxes through banking channels.

The representative of Finance Division agreed to the measures by Commerce Division to control the misuse of Import Policy Order, 2016, and highlighted that increase in import of used vehicles would result in balance of payment issues.

Representatives of SBP also endorsed the measures by Commerce Division vide SRO.1067(I)/2017and emphasized that utilization of the import facility provided in the Import Policy Order , 2016 must be controlled.

Secretary Commerce underscored the need for developing a transparent mechanism, mutually agreed by all public stakeholders, for implementation of Import Policy to avoid misuse by commercial importers.

Copyright Business Recorder, 2018


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